UK construction sector ends 2015 on a high noteadmin
December of last year was a very good month for the construction companies that offer housebuilding services. UK construction sector ends 2015 on a high note which an excellent way to start the new year with good vibes. 2015 had its ups and downs and created many uncertainties over the government’s policy, which prevented the housebuilders to invest in new projects, but they are willing to leave all that behind.
The commercial building sector in the UK also contributed towards the rise of the December index and helped it move from 55.3 to 57.8 which is a clear indicator of increased activity. They, along with the engineering sector, had a good month, and although the engineering sector seemed to have struggled a bit, the future is looking good.
It looks like the commercial builders are preparing to close one chapter for their London story, the one about the high prices of the land, which can be pretty discouraging when it comes to building. The decrease of the regional centers over the capital, as well as the lower demand for office premises has left them with no other choice then to stick to the south-east.
The construction industry is trying to recover from the economy crisis and that now seems more feasible than ever, especially since the government has decided to encourage the building on green and brownfield sites and finally get things moving.
More than half of those who participated in the survey panel believe that the business activity is expected to rise, whereas 7% see a possibility of reduction.
Max Jones, who is a construction expert at the Lloyds Bank, said that even though 2015 ended well leaving people room to hope for a better year, the forecast depends highly on which side of the fence you stand. The commercial construction is still struggling with the uncertainty in the different areas, in the prices of land in London and the south-east, but the housebuilders are supported by the government’s encouragement for people to build houses which will increase the demand for these services.
Tim Moore, who is an economist at Markit said that although the civil engineering sector had the worst results in December, in comparison with others, 2016 should open new ways that will help them increase their profit and level of activity. This movement will come as a result of the spending originating from flood relief and capital budgets and projects like the one including the Thames Tideway and Hinkley Point nuclear power station that will keep the industry rise.
The recovery process will not be easy, which is something that the construction analyst who works at the global credit insurer Euler Hermes, Kalpana Padhiar, also commented on. She said that the civil engineering industry will need time to recover from the unprofitable projects that they undertook during and after the economic crisis. There is no doubt that the success in December helped finish the year on a positive note but that shouldn’t serve as a distraction from the challenges ahead. We still have a sector that is wounded and bleeding and it will take time before it fully recovers. It is true that the sector feels more comfortable in being picky about the projects they take on, but the problems from previous years are still floating in the air. The capital pressure, the lack of skillful workforce and the possibility of increase in the interest rate, should be enough for companies to be careful and plan their next moves with great attention.