UK market intelligence - Autumn 2016
In our latest UK Market Intelligence report, we examine the trends facing the construction sector and discuss the impact affecting the market.
Tender price resilience
Investor uncertainty and softening demand have prompted many industry figures to predict a significant shift in tendering practices. Results suggest however that tender price inflation rose in the third quarter, and that an overwhelming majority of contractors expect this pattern to continue.
Competition and confidence continue to play a key role
Our survey found no immediate reduction in work volumes, and an increase in competition between contractors post the Brexit result. Results also suggest that the surge in competition is not being driven by a shortage of work, but instead by a shift in contractor bidding behaviour.
Squeezed margins and supply chain pressure
With input cost inflation frequently exceeding tender price rises, many contractors are having to trim their margins. Those surveyed in Q3 reported an average margin reduction of 0.4 percent compared to the previous quarter. Clients and contractors must therefore watch their supply chain closely in coming months for any evidence of distress.
Hope for the best, prepare for the worst
Market sentiment recovered well in the third quarter from the abrupt fall it suffered in the first weeks after the referendum result. The increased stoicism mirrored the industry’s growing acceptance that Brexit will be a gradual process rather than a sudden event – and that a prolonged period of uncertainty is inevitable. Our analysis at the end of the quarter revealed that market sentiment was broadly similar to its second quarter levels.
For full analysis and insights, download the full report.