The construction and trade sectors have seen particular growth following the lift in the spring lockdown according to PMI data, and this upward trajectory is expected to continue. The continuation of trade in the construction sector will prove to be the backbone of the economy this winter and with some large infrastructure projects getting the green light from the government in the past few weeks, long-term job creation is already on the horizon.
The Office for National Statistics (ONS) has reported that the UK economy grew by 15.5% in the third quarter of the year, which is the largest quarterly growth ever recorded. But this so-called growth comes as a small but welcome recovery from the record-breaking 19.8% decline seen in June, especially as this improvement was seen in all sectors of the economy, including services, manufacturing and construction.
“The economic recovery we have seen is indeed welcome, but of course with much of Britain in a state of national lockdown over the month of November, and the subsequent winter season is, of course, going to present yet more challenges,” said Ben Dyer, CEO of Powered Now, a mobile-based billing, invoicing and quotation application which specialises in trades. “That’s why it would prudent to look towards sectors that remain open, such as construction and the trades, to provide the kind of stability we need at the moment.”
The Construction app business has a client base of over 1500 SMEs, and has seen first hand the impact COVID-19 has had on businesses within trade sectors.
The new restrictions have had a “negligible impact on” the construction sector so far,” according to Dyer, and overall activity around construction has to be welcomed.
Market drivers and challenges
“Given the bonanza that housebuilders are currently experiencing from the stamp duty reduction, it’s no surprise that they are the best performing sector of the construction industry. Whether this boom for the housing industry will be followed by a bust is unknown. At the moment, most firms are just grateful for the good business they are getting right now given how much other sectors are suffering.,” said Dyer.
However, the CEO said it is disappointing that the supply of building materials remains a constraint and it could be argued that suppliers over-reacted to the first lockdown, creating this situation.
“The reduction in the rate of PMI growth seen in the past week could be the first signs of a drop in demand from lockdown related macroeconomic damage. Let’s hope that isn’t the case,” he said.
However, it looks like the new restrictions have not impacted the specific sub-sector of home improvement either, although the jury is still out. It may be that homeowners become more anxious over time, particularly if the virus continues spreading rapidly.
“The biggest concern overall is about the supply of materials. Fortunately, at the moment the indicators are that the shortage is easing,” said Dyer.
In addition to supply concerns, those with their own business serving the building trade must also worry about payments. The Cabinet Office is ratcheting up prompt payment requirements on main contractors when bidding for public work, it has been reported. As of October, the Cabinet Office is raising the threshold requiring 85% of invoices to be paid in 60 days, taking effect from April 2021.
“Those that fail the payment test are barred from bidding contracts. Originally, the Government aimed to lock-out any contractor failing to pay 95% of invoices within 60 days. But this regime had to be watered down at the last minute after warnings that most major players would fail the prompt payment test,” the Construction Enquirer reported.
Deals on the up
Construction deals that have been recently announced include the Gateshead Council- approved plans for a £260m arena and regeneration scheme that will be delivered by Sir Robert McAlpine, and the £1.7bn A303 Stonehenge tunnel project in Wiltshire, which has been approved by the government.
According to Construction News, Highways England chief executive Jim O’Sullivan said: “The A303 Stonehenge tunnel project is part of the biggest investment in our road network for a generation.”
The roads body named three joint ventures on its shortlist for the job in March including:
- BMJV, comprising Bouygues Travaux Publics SAS and J Murphy & Sons
- HDJV, comprising Hochtief Infrastructure GmbH and Dragados SA
- MORE JV, comprising FCC Construcción SA, Salini Impregilo SPA and BeMo Tunnelling UK
This Black Friday PoweredNow has a sales offer for the whole month of November.
To check out their pricing you can read more here. The software is also applicable to the Construction Industry Scheme.
Worth over £250 it includes:
- A SumUp card reader, allowing you to accept credit and debit cards from your customers (which gives you the ability to offer credit).
- An Esso Card which gives you approximately £150 saving at the pump.
- Your choice of Powered Now subscription until the end of the year, helping you get your life back from the paperwork.