Construction Output Falls, Positive Cash Flow Could Pick Them Up

10th May 2018.

UK construction output fell 2.7 percent in March, the biggest decline since August 2012, according to the Office for National Statistics.

In the last year, the construction sector has watched its skilled EU workers depart, suffered through the resulting skills shortage, and fought against political uncertainty and its effect on the workforce. The cold weather that befell the UK last month also was heavily felt by a sector that relies on outdoor activity and manual labour.

While other sectors are reaping the benefits of an improved wage growth and positive levels of employment, construction and retail sectors still lag behind. According to the new data from ONS, the decline in the sector has been driven by falls in both repair and maintenance, and new work, which fell 2.8 percent and 2.6 percent respectively.

Some of the blame has been directed at the so-called ‘Beast from the East’ storm that befell the UK earlier in the year, with construction companies suffering from poor turnout and disrupted delivery. The ONS did however, admit that it was difficult to estimate the overall impact the weather had on the sector, and insists there are other underlying factors,

The business landscape of the UK is shaky at best, with political uncertainty and difficult economic conditions plaguing the minds of both business owners and employees. The recent dip in output suggests a slowdown in professional enthusiasm, with bleak future prospects creating low morale amongst workers. This is where a third party could help revive business finances, such as the debt recovery services at the Credit Protection Association. Our collection team chase down unpaid invoices and provide financial freedom to overcome economic downturns.

Blane Perrotton, managing director of the national property consultancy and surveyors Naismiths, said: “Housebuilding was more than just the one bright spot against the increasingly dark backdrop – it had taken on a totemic importance as a beacon of demand, resilience and hope. Without it, the sector looks dangerously exposed. Not for nothing is construction is now suffering the highest number of new insolvencies of any industry.

“The slump in output is the worst for six years, as the industry has been hit for six by a toxic combination of weak confidence, softening investor demand and rising input costs. Despite the low-interest rate environment and abundance of finance available, developers are increasingly doubling down – concentrating on completing existing projects rather than commissioning new ones.

“At this rate there is likely to be more pain to come, as there is little sign of an end to the limbo which is prompting investors in London and the southeast to sit on their hands.”

Since the collapse of Carillion earlier this year, contractors have struggled to regain their strength. When the construction giant collapsed, it took many suppliers down with it. Many small businesses were awaiting payment and were left thousands of pounds in debt as a result. This vulnerability has been exploited by larger businesses who have exploited payment terms and have seen small construction companies suffer as a result.

As business confidence suffers from prolonged political uncertainty, output and productivity have stumbled. It is important this is swiftly restored if Britain is to keep its competitive edge intact and keep pace with rival economies. At the Credit Protection Association, our debt recovery services provide the financial freedom to allow our members to purchase new equipment and machinery, as well as launch new training programmes or initiatives. If output is to be boosted, the sector will have to ensure its employees have all the right toys, as well as the professional support, to pursue growth and ambition projects.