UK: Yorkshire and The Humber market intelligence - 2017 Q4

Learn the tender price trends, market conditions, basket of goods, outputs and outlooks for Q4 2017.

Tender price overview & market conditions

As of the fourth quarter of 2017, the Yorkshire & the Humber region appears to have improved on the already positive outlook seen in our previous survey. Order book statistics for this survey have increased significantly when compared to our previous survey results. In our Q4 2017 survey, contractors order books on average are 87.5% full for the 2017/18 financial year, and 60% full for 2018/19. In our previous survey these figures were 78.3% and 33.3% respectively. Results from this survey show on average order books are 26.3% full for 2019/20, also an improvement since our previous survey.

In this survey period, some contractors operating in the Yorkshire & the Humber region have expressed the market to be very busy. Although both cities have been described to be performing well, the Sheffield area has been described to be performing slightly better than the Leeds market. Despite this, one contractor has noticed a turndown in the volume of work within the Yorkshire & the Humber region, stating the market overall seems to be suffering from uncertainty. Contractors are also noticing relatively few subcontractors going into insolvency in the region and have mentioned they're also having better prices being negotiated with these subcontractors.

In terms of key challenges within the region, lead times are a significant issue for several contractors in the market. The lead times for piling and steelwork in particular have been noted as a supply chain challenge by one contractor.

Another challenge facing contractors in the region is a shortage of quality labour. This includes shortages in skilled labour for Bricklaying, Dry lining and Plastering. Also, one contractor has expressed issues in forecasting material prices, which have been said to be on an upward trend, in particular Steelwork and MEP prices.

Latest contractor feedback suggests tender price inflation will increase by 2.1% on average in 2017, with a range of 4 percentage points - between 0.0% and 4.0%. Over 2018 expectations are slightly higher, with a 2.3% average increase anticipated and with a higher range, between 0.0% and 5.0%. Further ahead, into 2019, prices are expected to rise by 2.5% on average in the Yorkshire & the Humber region. Forecasts provided in the Q4 2017 collation look to be slightly weaker than those provided in Q3 2017.

Over the last 12 months labour, material and plant items have appreciated by 5.6% on average.

Reinforcement bar displayed the largest accrued gain - increasing by 10.9%.

50t crane increased at the slowest pace - by 3.7%.

Labour costs increased by 4.1% on average, whilst material costs on average grew by 6.8%.

National basket of goods: 2017 Q4

Over the next 12 months labour, material and plant items are expected to increase by 5.2% on average.

Structural steel is forecast to appreciate the most - increasing by 7.2%.

Aluminium curtain walling is set to increase at the slowest pace - by 4.1%.

Labour costs are anticipated to increase by 4.4% on average, whilst forecast material costs on average are set to grow by 5.8%.

Key indicators - movement over past three months

Materials - on the up

Over the past three months, average contractor sentiment indicates that material costs have increased marginally.

Overheads and profit - stayed the same

Average contractor sentiment indicates that overheads & profit levels have stayed the same when looking back over the last quarter.

Preliminaries - stayed the same

Preliminaries have stayed the same according to contractor sentiment over the last three months. These vary by project size and specification.

Labour - on the up

The cost of labour, indicated by contractor perceptions, has increased marginally when looking back over the past quarter.

Inflation

Contractor forecasts for tender prices in the Yorkshire and The Humber suggest increases of 2.1% in 2017, 2.3% in 2018 and 2.5% in 2019.

Over the past 3 months, construction output in the Yorkshire and The Humber has increased by 0% to 2017 Q3. It increased by 11.3% over the past 12 months.

The largest increase on the quarter was other public repair and maintenance - increasing by 5.5%.

The largest decrease on the quarter was housing repair and maintenance - decreasing by -7.3%.

The largest increase on the year was infrastructure repair and maintenance - increasing by 81.2%.

The largest decrease on the year was private industrial new work - decreasing by - 36.4%.

According to survey returns, 0% of contractors anticipate that the market will get warmer over the coming year.

Approximately 75% of contractors have stated that the market will stay the same, whilst 25% have assumed that the market is getting cooler.

Average margins, preliminaries and overhead & profit levels according to survey returns equate to 3%, 12.5% and 4.9% respectively.

For further information, contact:

Ewan Shaw
Project Director

t: 0113 2054884
e: