UK construction is still in a good place despite the drop in today’s number. It’s the 19th straight month in expansion and we maintained it above the long run average of 54.5.
David Noble at CIPS noted that new orders and employment continue to rise and that the increases are being seen across the country, rather than the bulk in the South.
Headwinds are increasing for the sector though with supply issues for construction materials. Suppliers are struggling to meet demand and delivery times have lengthened. The other danger facing the industry is a lack of skilled workers and costs are rising as subcontractors are filling the gap.
Construction has been on a fabulous run for over a year and a half but it’s starting to flatten out slightly and the issues above are going to drag that out further. An easy option for firms is to take on more foreign workers to fill the gap and that might be something that becomes part of the political football, with Dave Cameron already making immigration a big campaign point. The opposition could well sight the skills shortage as a failure of the coalition to provide skills training to while so many were/are unemployed.
Of course, on the other hand the drop in commodities will give the industry a welcome boost and should see it in good stead for next year.
