2nd July 2014 • John Thatcher
The infrastructure and industrial sectors appear to be the driving forces behind recent expansion in the construction sector.
Whilst construction output remains around 10% below the pre-crisis peak, new housing growth, driven largely by the private sector, has ensured that the construction sector continues to improve. Despite the fact that margins remain tight at 1.9% (supply chain pressure has fed through), construction demand is indeed on the rise.
House building remains the fastest growing activity within the construction sector, and this can be attributed largely to the culmination of the first stage of the Government's Affordable Housing Programme, which renews in 2015.
With housing growth driven almost entirely by private sector investment and involvement, activity within the construction sector has continued to grow steadily over the last 15 months.
Whilst private sector investments in housing are the largest contributors to this continued construction expansion, it is important to note that the civil engineering sector has maintained its constant pace of growth, and that commercial activity has actually reported its sharpest rate of expansion.
The construction and infrastructure specialist 'Interserve' released their half year results on the last six months, ending June 30th.
The company reported a 15.4% increase on their total operating profit, with 9.1% growth in revenue, which means that there has been significant organic growth within the construction sector.
Indeed, it was reported that UK construction contributed £8million to Interserve profits, which puts them up 8%, whilst turnover increased 12%, resulting in UK construction for Interserve reaching £433million.
All of this reported growth means that construction companies like Interserve are seeing signs of increasing demand, although as Interserve's Chief Executive, Adrian Ringrose commented: "Market conditions in international construction and support services continue to be highly competitive."
The recent construction sector growth has done wonders for the job opportunities within the sector. With the housing crisis driving the creation of new properties, tens of thousands of new jobs are being created.
The subsequent growth of activity in house building, which accelerated in July to its fastest pace since November 2003, means that the number of jobs available in construction has increased by 43% over the past year, according to a recent Market/CIPS report.
Significantly, hiring within the construction sector grew at the fastest rate since April 1997, which means candidates are currently in a position to expect more from their employers. Average salaries for engineers have increased by 2.5%, whilst the average salary for those within the construction sector has increased by 3.5%.
With the majority of employers (68%) predicting looming skills shortages, and 45% of employees expecting to move jobs this year, it is no surprise to discover that the construction sector has ranked among the top 5 best performing sectors in the UK.