Nationside skip hire, Proskips looks at why optimism among construction firms is at its highest level for nine years…
The 1.2 million workers employed by the construction sector were responsible for 6% of the UK’s economic output in 2014, according to official government figures. In other words, just 5% of the UK workforce was responsible for £110bn of economic output.
And that figure is likely to increase in 2015 because optimism among construction firms is at its highest level since the heady days of February 2006.
While confidence alone cannot deliver an upturn in the number of residential, commercial and civil engineering projects underway, it does encourage those responsible for commissioning large-scale building work to invest in Britain’s future.
This is seen by the fact that in Scotland an £850m, 750,000 sq ft development at St James in Edinburgh and a £300m, 600,000 sq ft extension to Buchanan Galleries in Glasgow are set to get underway imminently, while the rate of job creation in the construction industry is at a five-month high.
This should come as no surprise considering recent reports in the construction media have covered the start of work on…
- An £80m research centre in Coventry for the University of Warwick and Jaguar;
- The first phase of a £650m regeneration scheme on land at Chatham Waters in Kent; plus
- The delivery of 3,500 homes and 2.8m sq ft of offices, shops and leisure facilities in 30 new buildings next to the Canary Wharf Estate in east London.
And where big construction projects lead, smaller construction contracts will follow. According to the Markit/CIPS construction purchasing managers’ index, 58% of the survey panel anticipate a rise in output levels over the next 12 months.
Another signal that confidence is increasing throughout the industry is news that in the past few months a UK manufacturer has landed contracts worth more than £150,000 to deliver a total of 68 skips.
Can the current high levels of confidence surrounding the construction industry be maintained? Simple economics dictates that while the cost of borrowing remains low, demand for new building projects will continue.
However, the construction industry could do without downbeat comments from Markit senior economist Tim Moore.
Anyone tempted to change this welcome mood of optimism should cast their mind back to 2011 when the collapse in investments in the final months of that year shaved 0.5% off the UK’s GDP as the escalation in the Eurozone crisis spooked some bosses.
Prior to the crisis shifting up a gear at the end of 2011, investment in the new projects and jobs had started to pick up.
Had companies spent the same in the final quarter of the year as the preceding 3 months, growth in the fourth quarter of 2011 would been 0.3%. United Kingdom shrank 0.2%. A loss of confidence doesn’t hit hard but it hits quickly.