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UK Construction Industry Stays Contraction-Hit, Despite a Seemingly Positive April

19th June, 2018

 

With construction output recording an increase of 0.5% in April 2018, it brought a ray of sunshine to the UK construction industry, which has recently been witnessing a steady contraction.

However, the woes of the industry seem to be far from over.

Despite the increase, the statistics from February to April 2018 show a decrease in output by 3.4%. The fall is steep, the biggest that the industry has experienced since August 2012. A fall of 3.7% was witnessed in new construction work, whereas repair and maintenance saw a fall of 3%.

The decrease has been steady given that there was a decrease of 4.6% in Quarter one, recorded over the months of January through March 2018, compared to the previous quarter. Moreover, the fall in Quarter one is by 6.6% compared to the same quarter of the preceding year.

There were periods of increase towards the end of 2017 though. A steady monthly rise in construction output was witnessed during the last two months of 2017 – it was, in fact, a record output for the construction industry.

The output was highest in December 2017 when it saw an increase of 30.3% of the lowest output recorded over the past five years, from April 2013. The bounce in output experienced in April 2018 has managed to put the output steady – 23.4% more than the lowest output recorded in April 2013.

A fall in output by £1.35 billion was witnessed over the span of three months to April 2018. The fall was experienced in almost all construction sectors with prominent damage coming from new-work sector. This sector saw a steep decrease, by £379 million over the three months leading to April 2018.

Other construction sectors that witnessed a steep decline include new work in private housing (by £189 million) and housing repair and maintenance (by £230 million).

The increase that has been witnessed in April 2018 is by £68 million, in comparison to last month. Sectors that contributed majorly to the overall increase were construction infrastructure, which witnessed an increase in value and new work in the private commercial sector.

Interestingly, both these sectors had a weak start as 2018 approached. The increase witnessed in April 2018 in both sectors was by £40 million (infrastructure) and by £37 million (private commercial).

Another prominent contributing sector to the April 2018 increase was repair and maintenance in the non-residential segment, which showed an increase by £34 million.

Economic experts stay sceptical though. Some are of the opinion that the increase witnessed in April 2018 could be an illusion of recovery. Industry developments such as liquidation of Carillion and bad weather conditions in February and March, could have contributed to this seeming growth in April.

The reason why experts feel the increase need not necessarily be a sign of recovery relates to how weak the output fared in comparison to April last year. There is a reduction of 3.3% in construction work, which equals £430 million.

The only sectors that recorded growth were industrial segments and private housing. Private housing owes its increase to the selling season that is traditional in the nation. The decrease in lead times in industrial settings led to the growth recorded in the industrial sector.

Further growth could be slowed down by the decrease witnessed in infrastructure and commercial construction, which contribute to almost 1/3rd of total construction output, experts say.

Other factors that experts attribute to the dip in construction output include increased costs for construction companies, including rising remuneration and material costs. The latter, experts believe, will continue to increase following a fall in sterling value post EU referendum.

Brexit and the questionable future of immigration and recruitment post-Brexit place the future of UK construction in uncertainty, economists conclude.

When it comes to quality infrastructure and construction plant & project machinery sales & hire, MTS Plant has everything covered. Based in West Yorkshire, England, we offer construction plant & project machinery hire & sales across multiple locations throughout the UK.

We are official dealers for Yanmar, offering excavators, wheel loaders and tracked dumpers for sale. We provide both brand-new and used machinery as part of our construction plant & project machinery hire.

Whatever it be, we offer complete backup and support for Yanmar equipment.

With years of experience in construction equipment industry, our construction plant & project machinery hire & sales dealership offers genuine Yanmar equipment, parts and service.

Call our expert team on 0808 231 0607 to enquire or for more information.

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We have been working with MTS Plant for just over 12 months now and have found their service and support second to none. Vanessa, Jenny, Matt and the team are fantastic and will always go the extra mile to meet our requirements. We have regularly used MTS Plant for Dumper and Excavator hire throughout this period and have found their range of machinery very reliable & of excellent quality. I would 100% recommend MTS Plant Hire.

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We have used MTS Plant for a number of years and have been constantly impressed by the service provided. We work in a quick-moving industry where our requirements for small machine hire can be at short notice and highly varied. MTS Plant manages to keep us supplied with quality machines along with great customer service. We look forward to driving our business forward knowing that we have the resources to satisfy our customers needs without the high expense of owning our own machines.

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MTS has been a great company to cross hire small plant in for our customers. The great thing about MTS is the friendly staff who are very committed to making sure Travis Perkins is a priority customer and will move things around in their daily transport too fit urgent orders in. Myself and my team now use Mts as our first point of call as we have confidence in how the business works from the staff to the machines themselves.

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MTS has arranged for us at times very short notice the most diverse ranges of hire equipment, even nationwide. We first started using MTS a few years ago now an don’t hesitate to call the well mannered and excellently informed staff, We have experienced difficulties when on hire and the response was second to none, from the delivery drivers to the mechanic’s, the professional advice and service we haven’t matched anywhere in my 32 years in construction.

The branch at Leigh is always ready to accommodate our needs and they do it with a cheerful professional manner every time.

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