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After a well-publicised slowdown earlier in the year, the construction industry seems to be back on track, with recent figures greatly surpassing expectations. But despite the good news, there’s still a long way to go – and this is the ideal time to plan ahead.


Glance at any reports from the last few months and you’ll see that 2018 hasn’t been the easiest of years for the UK construction industry. With the fallout of Carillion’s demise and Brexit to contend with, not to mention the snow which temporarily crippled the country, there have been more than a few tricky obstacles to navigate over the last seven months.

The clouds seem to be clearing, however, as figures for June show an unexpectedly speedy recovery at the midpoint of the year. But how did this injection of life come about? And can we expect the good news to keep coming?


Spring of Discontent

2018’s construction slowdown came three months into the year, following some strong February growth. Commercial building work, for example, was accelerating in the second month of the year – at its fastest rate since May 2017. Combined with a pick-up in residential construction, and the combined construction purchasing manager’s index (PMI) rising to 51.4 (the first rise in three months), it looked like 2018 was going to be an impressive year.

This was despite January’s hard-hitting news that construction giant Carillion was ceasing to exist, leaving supply chains fretting and employees stranded. Although many were concerned with the wider impact such a downfall would cause on the industry as a whole, February saw the damage – for the most part – limited.

March then followed, and the Beast from the East made its unwelcome entrance. With crippling snowstorms blanketing Britain, bringing infrastructure to a halt and costing the UK an estimated £1bn a day, construction professionals – and the industry’s growth – were abruptly stopped in their tracks.


The Road to Recovery

Once the snow melted, however, firms got back to work recovering. In April, only a month following the bad weather, house building was strengthening, playing a role in small-scale recovery. New work rose only modestly, but the month still brought the fastest increase in activity in five months. This was also despite GDP growth falling to a five-year low following the Beast from the East.

Fast forward to July and we have the enviable position of watching how the last three months have gone from strength-to-strength. In June, the sector saw the fastest growth in seven months, surpassing May’s 52.5 PMI to reach 53.1 – flying above the 52.5 median forecast. June also brought good news for the job market, with new orders and job creation both rising at an impressive rate.

The significance of this new-found vigour all lies in the bigger picture; construction accounts for 6% of the UK’s economy, and before the Bank of England raise interest rates, they want to be sure the spring’s economic stagnation was a temporary matter. The alternative would mean reservations around Brexit, leaving the country in a precarious position as it approaches its future.

Receiving news such as this, then, is a step in the right direction – and a reassuring one at that.


Sustaining the Momentum

Although June’s figures are something to be admired and celebrated, there’s still much more to do to strengthen the industry – and the economy, by extension. If we’re to prove that the UK is confident in its post-Brexit life, then we must fix the roof while the sun is still shining – that is, make vital improvements now, rather than wait for the other shoe to drop.

Part of those improvements includes embracing innovative technologies, such as VR and AI, and seeking out bespoke software solutions to industry-specific problems – the benefit of which was identified by Oxford Economics in May 2018.

The cross-industry report, created on behalf of Virgin Media Business, identified £92bn in economic growth, ready to be unlocked by gaining access to digital technology. In addition, 70,000 new jobs could be created, reaching more than a million within two years.

Most interestingly, construction was identified as the industry at the ‘forefront’ of who benefits. Part of the research acknowledged that construction firms who had willingly embraced technology had grown by an average of 5.9%, and remained optimistic about growth. There’s a lot to be gained for the wider industry, as well as individual firms.

In short, the technology on offer could drive construction companies into new areas of growth, post-Brexit and beyond –  and now, when things are starting to look up, is the time to investigate these innovative solutions and how they can make sure that the industry’s good news keeps on hitting the headlines for many more months and years.


Kaleida provide construction firms with bespoke software solutions, addressing industry-specific challenges using innovative insights and knowledge. To find out more about our work with the construction industry, feel free to explore our website, or get in touch for your free software review.

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