Selby on Construction
12 Mar 2013

12/03/13 | Selby on Construction

First the good news. Output in the construction sector grew for the first time in the last three months of 2012 – the first rise in six quarters.

Figures from the Office for National Statistics point to relatively buoyant growth in private housing and infrastructure, and the 0.9 per cent uptick was higher than the 0.3 per cent growth the ONS had initially forecast. What’s more construction output is predicted to rise in 2014.

The bad news? There will be an awful lot of pain between now and then. And according to the Construction Skills Network it will be 2022 before pre-recession levels of output will be reached again.

Business failures are a lag indicator of the nation’s financial health. So with official statistics showing a fall in new construction activity of 11.6 per cent for Q3 2012 compared with a year earlier, and the level of construction orders 6.7 per cent lower than in 2011 – and the third lowest quarterly figure on record – there’s some cause for concern.

Comments Ian Selby, CIFS Risk Underwriter specialising in the construction sector: “Identifying the “winners” in this economic landscape is only going to get tougher in the near term. Credit managers will have to pay even more attention to the sectoral/regional mix their customers are operating in – for example, the CSN predicts that only Greater London and East Anglia are likely to show any employment growth between now and 2017.

“Businesses serving the construction sector will need to be more proactive and assertive than ever in gaining an understanding of their customers’ financial position, and importantly, they’ll need a detailed knowledge of their customers’ current order books.

“This is information we gather on a routine basis for our own market analysis and we’re happy to exchange data with CIFS policyholders whenever we can.