What 2016 holds for the construction industry

Published Tuesday 21st June 2016

In this guide, we'll take a look at what 2016 holds for the UK construction sector and explore what kind of economic climate tradesmen can expect.

Forecast

The construction industry has taken a dip slightly this year compared to previous years – but can we expect more of this to come?

The Office for National Statistics (ONS) reported that between January and March this year, output in the construction industry was estimated to have decreased by 1.1% compared with Quarter 4 (October to December) 2015.

Downward pressure on the quarter came from all new work which decreased by 0.6% and repair and maintenance (R&M) which also has decreased slightly, by 1.9%.

Between Quarter 1 (January to March) 2016 and Quarter 1 (January to March) 2015, output was estimated to have decreased by 1.9%.

ONS defines output as the amount charged by construction companies to customers for the value of work (produced during the reporting period) excluding VAT and payments to sub-contractors.

However, Experian recently reported that construction output is expected to grow by 3.6% this year and 4.3% in 2017.

A similar conclusion was made by research undertaken by CITB, who suggest that while output in the construction industry is projected to expand at an annual average rate of 2.5% between now and 2020, this is slightly lower than what was predicted in 2014. This slowdown in expansion is almost inevitable as the industry moves out of its initial recovery period and into one of sustained growth.

The above graph suggests that there has been continuous growth within the industry since 2013. Yet the growth forecast from last year was lower than expected, which was put down to uncertainties from the general election. So should we expect a similar situation this Summer or will we see the growth trend continue?

Brexit

It’d be stupid to ignore the Brexit debate of what will be defining moment of 2016 for the UK, not just the construction industry.

The UK public will cast their votes to whether the United Kingdom should remain a member of the European Union or leave the European Union.

The general consensus seems to be that Britain’s departure from the EU would hit housebuilders’ workforces hard and worsen the housing crisis.

A recent survey, carried out by accountants Smith and Williamson, found that 85% of construction and real estate companies were in favour of remaining part of the EU, while most polls show the British public is pretty much evenly split between staying and leaving.

Ultimately, there is still a great deal of uncertainty of what a vote to leave the EU will mean for the UK and the construction industry.

And You?

Do you have any thoughts on what the rest of 2016 will hold for the construction industry? If so, be sure to give us a shout on Twitter – we love to hear what you have to say.

And if you're looking for timber materials for an upcoming project, don't hesitate to get in touch today.