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Fourth consecutive quarter of construction growth but costs rise

Construction activity has grown in four consecutive quarters for the first time in six years, according to the Construction Products Association’s latest trade survey.

Fourth consecutive quarter of construction growth but costs rise

Firms across all areas of construction reported increased output in Q1 of this year, including building contractors, SMEs, specialist contractors, civil engineers and product manufacturers.

Commenting on the survey, Dr Noble Francis, Economics Director at the CPA believes the increases in orders and enquiries “clearly indicate that activity will continue to rise throughout 2014”.

He said: “Unsurprisingly, private new housing was the key driver of construction activity. On balance, 57% of contractors stated that sector output rose in Q1 compared with a year ago, a considerable rise from the 20% balance reported in 2013 Q4. In addition, output in commercial offices and retail, the largest construction sector, rose for 22% of contractors, on balance, compared with a year earlier. This is a significant rise from the 8% balance reported just three months ago.

However, there is growing concern with rising costs and skills availability in sectors such as private new housing, according to Francis.

He added: “Overall, the industry reported that there weren’t serious problems recruiting construction trades. However, 61% of building contractors reported that it was difficult to obtain bricklayers during Q1 compared with 41% in Q4 and only 10% one year ago. A further 28% reported that they had difficulty recruiting carpenters in Q1, slightly lower than the 32% in Q4 but contrasting sharply with only 3% experiencing difficulties recruiting carpenters in just one year ago.”

Paul Senior, national chair of the National Federation of Builders, added that while rising workloads and increases in future orders are good news, the latest figures are a cause for concern.

Senior said: “Higher labour costs and a lack of available skills are a ticking time bomb that needs to be defused urgently otherwise, for many SMEs, the premiums attached to the cost of simply building will become unsustainable.”

About Fiona Russell-Horne

Fiona Russell-Horne
Group Managing Editor across the BMJ portfolio.

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