Business confidence in the construction sector is higher than in any other business sector, and construction businesses are even anticipating growth in export sales in the coming months, according to the latest ICAEW/Grant Thornton UK Business Confidence Monitor (BCM).
The accountancy firm’s BCM Confidence Index for UK business as a whole stands at +37.2, up from +31.7 in Q4 2013, a new record high.
In comparison, the BCM Confidence Index for construction stands at +52.2, a significant increase from +31.4 in Q4 2013, making it the most confident sector in the quarter.
Businesses overall report the fastest investment growth since 2008, but growth in exports is expected to fall back – a concern due to the current trade deficit.
But construction businesses are an exception to this trend, expecting growth in exports of 4.8% in the year ahead, compared with national average predicted export growth of 3.9%.
The sector has seen slightly higher employee growth than the UK national average, and this is expected to continue over the coming year as anticipated growth in profits and sales will lead to greater job creation.
The report also shows that the services sector has rebounded compared to pre-crisis output level, with output in Q4 2013 standing 1.4% higher than in the same quarter of 2007. But output of the production sector was 12.3% lower and in the construction sector output was 10.3% lower.
The report sees this as a strong argument to retain the Bank of England’s current low interest rates. “With output in production and construction still well down on pre-crisis levels, the Bank may want to wait until spare capacity diminishes in these sectors before raising rates.”
Phil Westerman, partner and head of construction at Grant Thornton UK, commented: “With construction firms predicting strong profit and employment growth, this indicates a real turnaround for one of the sectors worst hit by the downturn. Overall figures remain encouraging, particularly in regards to expected growth, this is despite output remaining well below its pre-financial crisis peak. There is very much a feeling within construction companies we’ve been talking to that the sector will be a key driver for recovery in the year ahead.
