UK market intelligence Q3 2019: Warning signs
As the prospect of a ‘no-deal’ Brexit looms on the horizon, so too does the threat of a technical recession. UK construction risks becoming both a casualty, and a cause, of the wider contraction.
Yet, as our Q3 2019 UK Market Intelligence report shows, amid a slew of weak economic data, the construction sector boasts two small fig leaves.
Its sharp contraction in Q2 2019 – in which total construction industry output fell by 1.3 percent on the quarter – was exaggerated by the surge of stockpiling recorded in the preceding three months.
And while construction’s reversal must shoulder some of the blame for Q2’s woeful GDP figures – which saw UK output as a whole shrink by 0.2 percent – its decline was dwarfed by the sharp 2.3 percent drop recorded in manufacturing output.
The net result offers the most modest of consolations. With UK output now falling for the first time in nearly seven years, the construction industry can lay claim only to severe weakness, rather than the economy’s wooden spoon.
Ignored but inescapable – the peril of poor productivity
Respondents to our contractor survey cited political instability as the single greatest challenge to the delivery of projects in the UK. A direct corollary of this instability – the market’s lack of confidence and unwillingness to invest in new projects – emerged as the third biggest challenge.
While the strains of falling demand, weak confidence and shrinking profits are being felt across much of the construction industry, there is one factor that appears to be slipping under the radar – productivity.
Digital key to unlocking productivity potential
No one innovation can magic away construction’s productivity problems. Off-site construction techniques have the best claim to white knight credentials – yet their potential is being stifled by piecemeal adoption. From a productivity point of view, the benefits of integrating off-site manufacturing techniques into the construction sector is compelling.
Download the report to see more economic data and insight, and read about tender conditions in the UK and Europe.