Construction Sector Stumbles, Credit Managers Offer Support

5th April 2018.

Activity in the construction sector plummeted in March as snowstorms put a sudden brake on projects.

After the stint of bad weather that befell the UK in recent weeks, sectors that rely on physical labour, outdoor projects, and cross-country deliveries have suffered the aftermath. Construction and building industries contribute heavily to the health of the economy and are still reeling from the recent collapse of construction giant, Carillion. According to new figures released by The Times, activity in the construction sector has plummeted to its weakest since June 2016, a month after the Brexit vote. Economists are surprised by the low reading, as many were expecting the purchasing managers’ index to produce a positive measure. The new data further revealed longer delivery times, and disappointing levels of demand as sales and output slow down; all signalling the tough road ahead for the sector.

Construction and building sectors make up an important element of the economy, providing all the bankers and politicians with somewhere to live and work. These sectors rely heavily on traditional methods, with many using manual labour rather than new technology that could ease the strain. We understand that not all business want, or need, expansion and our services merely supply the opportunity. At the Credit Protection Association, our debt recovery services have been used to expand a business, sidestep liquidation or even just provide a bit of financial cushion. No-one can predict bad weather, but you can prepare your business for whatever scenario befalls it; whether it’s a snowstorm or the Bank of England’s next interest hike!

The PMI survey revealed that the so-called “beast from the East” forced many small housebuilders to close sites for more than a week and some reported that it was too cold to lay bricks. There was little effect on the housebuilding sector overall, but other sectors were hit badly.

The bad weather is not the sole cause of trouble within the sector, as many sectors are still suffering from prolonged Brexit anxiety, with the government’s trade talks with Brussels continuing at a slow pace.

Brian Berry, chief executive of the Federation of Master Builders, said that the uncertainty is affecting smaller housebuilders. “We still don’t know what the post-Brexit immigration system will look like and, given that businesses need to plan ahead, this could also be putting a brake on growth,” he said. “Our sector is heavily reliant on EU tradespeople, with more than 8 percent of construction workers hailing from the EU. In London, this rises to one third.”

Despite the drop in activity and new orders, construction companies are more confident about future activity than at any time in the past nine months, suggesting that they think that there will be a rebound soon. Employment growth hit a three-month high, attributed to forthcoming project starts and long-term expansion plans.

Bad weather can affect all areas of business, whether it complicates a commute, delivery route, or the ability to build a house. The snowstorm that occurred last month affected all manners of consumers and professionals; but just as the sky has since cleared, so can a business’ finances. Put in layman terms, any drop in demand or morale can be helped by a bit of extra cash.

Since the Brexit vote two years ago any industries dealing in manufactured goods or labour have witnessed a change, or more importantly, a change of opinion, as rival economies lose faith in the UK. Competition is tough, and our limited resources and pending division from the EU, is not working in our favour. It is therefore up to the sectors to put up a strong front, to boast new technology in business and even faster productivity.

At the Credit Protection Association, our debt recovery services have funded many expansion projects for a range of sectors, from brickies to carpet salesman. Installing GPS into all your lorries, or handing out smart glasses at construction sites, can not only enhance productivity and cut costs, but also improve your workers’ safety and overall morale.