So we’ve had another set of GDP figures and this time we’ve officially had a full recovery out of recession. But while the economy grew by 1 per cent in Q3, there was a further contraction in construction sector output.
So how worried should we be at the sector’s continuing stagnation? Well, perhaps not quite as worried as some analysts suggest. The truth is that for every gloomy prediction, there’s an equally optimistic forecast about a recovery in the construction sector.
The latest glimmer of hope comes from the Bank of England’s Ben Broadbent, who has cited a number of reasons for his optimism on the construction industry, including stabilising public-sector investment and the Funding for Lending Scheme (FLS), which provides cheap funding to banks if they keep lending.
He believes that because no local boom preceded the “bust” in construction in Britain (he instead argues the UK construction sector was a victim of the global credit crunch), there is still spare capacity and room for the sector to grow.
To some extent, this is substantiated by what we’re seeing on the ground. Recruitment intentions by major contractors remain high and we are seeing strong demand for training services.
Our recruitment business is expanding this year (as it has done for the past two years), we have launched a new civil engineering division, and are moving into a larger branch in Lichfield giving us space to triple the size of the team.
We are also seeing some quite sizeable clients ordering training courses for hundreds of their staff. That these clients are planning for their future needs is perhaps a good indication of the recovery to come in the property and construction sector.
In one of my previous blogs, I questioned how much attention we should pay to construction output figures. They are a huge distraction for businesses that should be focusing their decisions on what they are seeing on the ground, not what’s happening to the sector as a whole.
I stand by these views. There are certainly grounds for optimism, based on what we’re witnessing and what our clients are telling us.