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Strong Cash Flow Will Sustain Construction Growth Levels

Britain’s construction sector is continuing to recover from a slowdown caused by snowstorms in the first three months of the year.


The construction industry has suffered a few knocks in the last few years. Firstly, the Brexit referendum in 2016 left a lingering uncertainty across the business landscape, impacting productivity and ultimately leading to the departure of a large proportion of the EU workforce.

Earlier this year, the industry was hit hard by the collapse of Carillion, devastating suppliers across the country and sending ripples throughout the community. Lastly, the snowfalls that covered the British landscape in March left many small businesses struggling to pursue business as building sites and deliveries were disrupted by the bad weather.

After months of stunted growth and low business confidence, the industry is now on the road to recovery. According to a new purchasing managers’ index, a closely watched survey, new orders among construction firms have risen at the fastest pace since May 2017. Furthermore, hiring was at its strongest level in a year and business optimism has also improved.

Construction output has experienced the sharpest rise since November, as business confidence finally rebounded. The so-called “Beast from the East” snowstorm destroyed confidence as many housebuilders were forced to halt work for weeks at a time. Recent economic upturns, such as accelerated wage growth and low unemployment, have repaired some of the damage.

At the Credit Protection Association, our services do more than provide an injection of cash, we also encourage a more confident outlook. The CPA debt recovery service frees up cash flow and awards our Members with renewed financial stability, helping them to recover from the knocks and also provide them with the tools to fight back.

Tim Moore, senior economist at IHS Markit, who conducted the survey, said: “The latest increase in UK construction output marks three months of sustained recovery from the snow-related disruption seen back in March.

“A solid contribution from house building helped to drive up overall construction activity in June, while a lack of new work to replace completed civil engineering projects continued to hold back growth.”

Duncan Brock, group director at the Chartered Institute of Procurement and Supply, which sponsors the survey, said: “With the fastest rise in new orders since May 2017, it appears the brakes are off for the construction sector. Despite being hampered by economic uncertainty, firms reported an improved pipeline of work as clients committed to projects and hesitancy was swept away.”

UK construction companies also reported a rebound in business optimism from May’s seven-month low, although the degree of positive sentiment remained much weaker than the long-run survey average.


The construction sector makes up about 7 per cent of the economy but it is an indicator of the demand for new homes and the willingness of businesses to commit to new office space at a time of economic uncertainty. 

As a business owner, economic and political disruptions will always try to trip you up, but it is equally important that every business owner pulls themselves up again. Many major issues can be resolved through a focus on cash flow. The late payment culture has continued its torment over the small businesses of the UK, but credit managers are slowly easing the strain through cash flow management and attention. Construction output may have risen, but business owners should ensure this pace is sustained; again through the scrutiny of cash flow.

At the Credit Protection Association, many of our Members originate from the construction industry, and a large majority were hurt by Carillion’s collapse and the snowfalls in March. By approaching a third party, our Members have imparted the burden onto our shoulders.

While business owners may want to keep credit control within their own four walls, if contractors are concerned for their future prospects, approaching CPA for advice could be a good place to start.

Please call us on 0330 053 9263 to discuss how CPA can help your cashflow.
Alternatively, either email us or use our contact form.

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The Latest Insolvencies to 04 Jul 2018

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