News

Construction sector confidence shoots ahead encouraging export intentions for 2014

Business confidence continues to grow amongst construction businesses, according to the latest ICAEW/Grant Thornton UK Business Confidence Monitor (BCM). However, concerns remain as skill shortages become more prevalent. 

Key findings for Q1 2014 show:

  • The BCM Confidence Index for UK business as a whole stands at +37.2, up from +31.7 in Q4 2013, a new record high
  • Comparably, 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 and indicating there is a recovery ahead in the UK construction market
  • The UK economy is forecast to grow by 1.5% in Q1 2014
  • 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.  However construction businesses expect growth in exports of 4.8% in the year ahead, compared with national average predicted export growth of 3.9%

As the construction sector recovers, workforce  skills shortages  will become more pronounced. 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.

Table 1: comparison of construction sector confidence vs. UK overall and other sectors

 

Q1 2013

Q2 2013

Q3 2013

Q4 2013

Q1 2014

UK

12.8

16.7

24

31.7

37.2

ALL PRODUCTION

6.6

17.8

20.5

26.1

27.9

Energy, Water & Mining

4.3

20.3

11.7

14.2

21.6

Manufacturing & Engineering

7.4

17

23.5

30.1

30.1

Construction

13.8

22.7

31.4

37.8

52.2

ALL SERVICES

14.2

16

24

32.5

37.6

Retail & Wholesale

12.4

9.3

22.4

34

34.7

Transport & Storage

14.9

7

19.5

28.5

37.1

Banking, Finance & Insurance

13

30.1

28.6

35.6

41.6

Property

16.5

19

18.2

44

43

Business Services

12.6

11.1

22.6

31.3

39.7

IT & Communications

19.7

25.5

30.8

22.9

30.5

Phil Westerman, Partner and Head of Construction at Grant Thornton UK LLP, 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 that the sector will be a key driver for recovery in the year ahead.

"Growth continues to be generated by housing and rail, fuelled respectively by the government's Help to Buy scheme, and  the unveiling of Network Rail's latest plans for a Heathrow rail link. It is important that construction businesses capitalise on and invest strategically in their workforce to combat the skills shortage in the current market, while recognising the risks that are associated with periods of growth."

The property sector has maintained the high levels of confidence continued from the previous quarter: the Confidence Index stands at +43 for the sector, compared with a national average of +37.2.