Wrightstyle, the international steel and aluminium glazing specialist, has welcomed industry and government figures that point to renewed buoyancy in the construction sector, while only being “cautiously optimistic” that industry growth will have a major impact beyond the housing sector in the short term.
The company, which exports internationally, particularly welcomes the announcement by a group of major insurers to invest £25 billion in UK infrastructure projects over the next five years, underlining new confidence in both economic growth and investment opportunity. This is matched by publication of the government’s National Infrastructure Plan, identifying actual and prospective projects over the next 25 years or more.
Other indicators are also positive, believes Wrightstyle, including the latest Markit/CIPS Construction Purchasing Managers’ Index which rose to 62.6 in November, the strongest output growth since mid-2007. “This indicates growth in the sector, matched by much improved performance in the wider economy,” said Tim Kempster, Wrightstyle’s managing director.
The Office for Budget Responsibility is forecasting stronger than expected GDP growth for 2013, up to 1.4% compared with its forecast of 0.6% made back in March. This, the OBR believes, will reach 2.4% for 2014.
GDP is an important indicator for the construction industry, and the Office for National Statistics (ONS) estimates that the sector accounted for 6.3% of the economy in Q2 2013. However, that figure should also be seen against the 15.8% fall in construction output between Q1 2008 and Q2 2013, although Glenigan is forecasting a 4% rise in project starts next year.
“However, the ONS also estimates that private industrial and commercial activity – which includes everything from the construction of new factories and warehouses, to offices and schools – fell by 34.6% between the same period 2008-2013, representing a significantly larger slump for the commercial construction sector,” said Tim Kempster.
According to ONS figures, construction output increased by 5.8% between September 2012 and the same month in 2013. New housing showed the largest increase at 13.6% - underlining more sluggish recovery in non-residential construction.
“We are therefore cautiously optimistic that construction growth will continue, and we particularly welcome the decision by major insurers to invest in new infrastructure. Recovery in the construction sector should be balanced between residential and non-residential markets. We aren’t yet seeing that balanced growth across the sector and, although the indicators are positive long-term, it will take some time for new build activity to make a real impact,” said Tim Kempster.
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