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Construction sector – what will 2019 bring?

The last few years have been, in the main, good ones for the UK’s construction sector. 

This continued when the industry experienced an uplift in business optimism at the end of 2018, according to an influential report from Markit Economics. But, it also saw business activity easing to a three-month low with new orders expanding at a relatively subdued pace.

The main bright spot was a sustained rebound in civil engineering activity, which rose at the fastest pace since May 2017, with survey respondents citing hopes of a boost to growth from work on big-ticket transport and energy infrastructure projects in 2019.

Close Brothers Asset Finance’s own quarterly research of construction firms shows that most business owners are positive about the state of the economy, with 38% of those surveyed confident that the economy will continue to grow while a further 30% feel that while the worst is behind us, it will be a slow path to prosperity. A further 19% of respondents think the economy is either worsening or it hasn’t grown at all.

Performance expectations

Looking ahead to 2019, over half of respondents (51%) expect to be treading water with no expectation of growth; however, a healthy proportion - 37% - are anticipating their business to grow over the coming 12 months. Only 12% expect to contract or close down.

Concerns

Maintaining cashflow is by far the biggest concern for construction firms, with 36% naming it their number one issue. Competitive pressure comes in second (14%), followed by ‘late payments’ (12%) and ‘the lack of skilled staff’ (11%).

Priorities  

The business priorities for firm owners is split fairly evenly between three key areas:

  • Achieving growth – 36%
  • Paying down debts – 27%
  • Business consolidation – 25%

Investing in staff is a priority for only 4% of respondents while for 9% it is product development.