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Growth in output and employment sees a surge in the UK Construction Industry in Second Quarter of 2018

Posted on Oct 04, 2018

After a relatively weak start to 2018, some encouraging news for the construction sector as comes in the form of new statistics released by the Office for National Statistics: construction output has increased by 3.3% in the three months to July, driven by growth in both repair and maintenance, and all new work, which increased by 5.3% and 2.3%.

Construction output also increased by £1.34 billion in the three months to July. Infrastructure was responsible for the most notable increase of £414 million. Other noteworthy growth came from the repair and maintenance sector as well as both non-housing repair and maintenance, and housing repair and maintenance which both experienced growth by £348 million and £375 million respectively.

In addition to this, activity in the industry remained above contraction levels for a fifth month running this August. IHS Markit’s PMI measured the sector’s growth which is down 3 points from a 14 month high of 55.8 in July. Despite the results falling considerably below economists’ expectations, analysists remain optimistic that the sector will be elevated by major ongoing infrastructure projects such as Heathrow Airport’s new terminal and the Crossrail rail Network.

It’s worth noting that the publishers of the survey attribute the fluctuating levels of growth seen in construction, thus far, are a result of the adverse weather we experienced earlier this year.

Despite this, respondents reported feeling that economic and political uncertainty, with particular emphasis on Brexit, was the main factor in reduced growth, believing that the unstable climate has made investors more cautious.

Another positive note to add is that as well as industry growth, employment has continued to grow across the sector, maintaining a 2-year high first achieved in July. In addition, statistics suggest that wages for construction workers have also continued to rise with an 11% average increase in pay since the EU referendum in 2016.

Stuart Anderson of Construction Skills People said the recent figures from the ONS point towards a promising future for both employees and businesses within the construction sector. He said: “It’s encouraging to see the industry is still keeping its momentum after a somewhat difficult start to 2018.

“Despite there still being some concerns surrounding Brexit, the industry is continuing to grow with both employment and wages rising since the referendum as well as an increase in output growth.”