The Crystal Ball – Construction Industry Predictions for 2018

The Crystal Ball – Construction Industry Predictions for 2018

18th January 2018

As we leave the glitter and stardust of the festive season behind us and settle into the third week of a brand new year, we’re going to take a look at some of the predictions for the construction industry in 2018 as we all wonder what the future has to hold for us.

Gloomy news to begin with is that growth prospects for the UK construction industry have been downgraded and the coming year is expected to present the industry with some real challenges as the sector is set to expand just 0.7% in 2018.  This is the slowest rate in six years and a downward revision from the previous estimate which was 1.2%. 

Despite contractors reporting high current activity, prospects for construction have been affected by the slowing of general UK economic growth and a fall in real wages.  These issues, when combined with a sharp rise in costs have had an adverse effect. 

The decrease in new investment that began after the Brexit vote is likely to continue, especially cases of large international investment looking for a long-term rate of return.  This will result in a decline in both the commercial and industrial sectors.

The housebuilding sector is likely to see growth as the government scrambles to fix Britain’s housing crisis following the Conservatives’ pledge to build 300,000 new homes a year in the budget.  Chancellor Philip Hammond ploughed an extra £10 billion into the help-to-buy loan scheme and cut stamp duty for first time buyers which is likely to have a positive effect on housebuilding activity.

A robust demand for construction products and materials contributed to a marked lengthening of suppliers’ delivery times at the end of last year which resulted in an upturn in input buying.  However, strong cost pressures have persisted across the sector driven by rising prices for a range of inputs, in particular higher prices for bricks, blocks, insulation and roof tiles and a continuing rise in the cost of imported products.  Despite this rebound in order volumes, construction firms indicate little optimism regarding the overall business outlook for 2018.

Total new orders increased at a fast pace in December 2017, providing a positive signal for construction workloads in the short term, however while forthcoming project starts has led to an increase in job creation.  Construction companies reveal that longer term business confidence is relatively subdued, reflecting concerns about the unclear outlook on the domestic economy as the UK negotiates a Brexit deal with the European Union.

It’s not all gloom and doom, though, there are some exciting developments to look forward to as the British construction industry embraces change and new technology.  We’re likely to see an increase in modular construction techniques which is great news on the health and safety front as the necessity to work at height is reduced.  We’re also beginning to see real efforts being made to recruit and train the construction workforce of the future with progressive initiatives like the Apprenticeship Programme and T-Levels and, it is predicted that Construction Ambassadors will have a positive effect on attracting new, young recruits to choose a career in construction.