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Should we pay attention to construction forecasts?

14th May 2012

Many people will be baffled by the flurry of reports and figures that have been released in the last month that paint a wildly varying outlook for the UK construction sector. The latest survey carried out by RICS shows that construction activity levels edged up in the first three months of the year with predictions for the year ahead at their most optimistic in four years.

According to the RICS survey, released at the beginning of May, 21 per cent more respondents are expecting workloads to rise over the coming twelve months, the most positive reading since the early part of 2008.

Contrast this with the sharp fall in output suggested by the Office for National Statistics, which said construction had plunged the UK back into recession. Also in recent weeks, the Construction Products Association has said that the industry is continuing to suffer, while government statistics have reported a hike in insolvencies and drastically reduced levels of bank lending.

Just to confuse the picture further, the RICS survey supports the positive outlook projected by the Market/CIPS data, while the National Specialist Contractors Council was also more positive.

So who is right? And more importantly, can these reports really be that good a measure of what’s going on in the sector?

My thoughts are that they do provide a useful guide to activity levels, but like all statistics they have to be taken with a pinch of salt.

It’s the same when you look at the anecdotal evidence. For every contractor that goes into liquidation, another is reporting an increase in sales. For every construction firm that announces job losses, another is unveiling new recruitment plans. When work on one building site stalls, another project gets off the ground.

With the wider economic picture very unsettled, I suspect it will remain this way for many months to come.

From a Bromak perspective, there is certainly no reason to be overly concerned. We continue to see steady levels of recruitment across most built environment sectors. However, we all have to be realistic about the growth the construction sector can expect to have in the coming years. It’s going to remain tough.

That said, rather than allowing ourselves to worry when the figures don’t look that good, or getting carried away when the outlook seems rosier, we have to concentrate on activity within our own businesses and sub sectors and not get too distracted by the wider economy.

That’s why we have focused on adding value to our service, such as launching our training offering and working hard to mirror our clients’ health and safety accreditations. By seeking to become more than just a recruitment business, we are working with a wider range of clients who are giving us a bigger proportion of their business.

The result has been a record year for the business with a £9m turnover, up 30 per cent from last year.

In summary, let’s pay attention to construction forecasts, but let’s not allow them to dominate our decisions.

David Brooks
Managing Director
Bromak

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