The construction industry is one of the largest and most important sectors in the UK economy.
It employed over two million people and contributed £115.5 billion to GDP according to the latest figures for 2021.
A spike in demand in the housing market during the tightest grip of the COVID-19 pandemic led to renewed demand for construction, but rising interest rates and the cost-of-living crisis has slowed the rate of house purchases. Is this reflected in the construction industry?
UK construction figures in 2023
Figures from the Office for National Statistics (ONS) show that construction output in the UK increased by 1.6% in June 2023 – the third consecutive monthly increase, following a strong performance to start the year.
The growth in construction output is being driven by a number of factors, including:
· The government’s £100 billion infrastructure investment plan providing funds for construction projects
· An ongoing need to build more homes to meet demand from a growing population
· The growth of the renewable energy sector driving demand for new facilities
The impact of growth on construction sites
The growth in construction activity is generally having a positive impact on construction sites. There is more work for contractors, which typically results in increased employment and wages.
However, the increased activity has resulted in a growing scarcity and price of many raw materials, which has been a significant challenge for firms to overcome in recent months. Some specialised roles are also experiencing a shortage of skilled workers, which can slow jobs down.
One of the challenges facing construction companies is the need to find adequate site accommodation for workers, especially on large-scale projects.
Site accommodation hire companies are playing a vital role in providing adequate facilities for workers, helping to keep construction projects on track and help firms meet their health and safety obligations.
Can supply chains keep up?
The growth in construction activity is putting substantial pressure on supply chains. There are shortages of materials and labour, which is driving up prices and delaying projects.
Russia’s invasion of Ukraine is also having a negative impact on supply chains, as it has disrupted the global trade of commodities such as steel and timber.
Construction companies are working to mitigate the impact of supply chain disruptions by placing early orders for materials or finding viable alternatives.
How construction companies are adapting
The construction industry is adapting to the challenges of growth by:
· Investing in new technology, such as improved site equipment to decrease delays
· Autonomous plant machinery increasing efficiency
The construction industry is facing a number of challenges, but it is also undergoing a period of rapid change.
The industry is becoming more technologically advanced and efficient, and firms are also becoming more responsive to the needs of their clients as a result.
