UK construction industry growth best since Dec 2007

According to figures released last month, the UK construction industry is currently experiencing the fastest rate of growth since Dec 2007. Driven by growth in both the residential and commercial property sectors, April was the second month of consecutive growth in construction activity.

The (PMI), construction Purchasing Managers’ Index also rose from 53.1 in March to 58.2 in April, where any figure  above 50 is an indication of expansion. Incidentally, this is the highest PMI figure since September 2007, when the credit crunch and wider recession was starting to take hold.  The Chief Executive of the Chartered Institute of Purchasing & Supply David Noble, said: “It is encouraging to see the construction sector show signs of recuperation for the second month running….suggests that the whole UK economic recovery has real substance.”

In other press, Begbies Traynor (the turnaround advisors) also cited North West businesses, particularly construction for some of the biggest drops in firms suffering critical or significant financial distress.

At Factoring Finance, we have also seen the number of referrals for invoice and asset finance such as factoring, invoice discounting, and particularly useful for the construction industry, inventory finance increase over the same period.

Inventory finance can be used by firms other than construction but its main use in the construction field is where enough raw materials are bulk purchased to complete several months worth of construction work, but for which payment from the client may not be fully realised until completion. With some inventories running into many thousands or even millions of pounds many firms use this type of facility to improve cash flow during the project completion.

Whilst we are far from being an indicator of UK wide sector performance, it is encouraging to see firms in the construction sector getting a little reprieve from the onslaught its had over the last 30 months.

Whilst, growth in construction and indeed manufacturing are usually both indicators of wider economic prosperity, (and there are some notable projects commencing) the general feeling in the construction industry in the North West at least, is one of caution.

Activity may well be up over a two month period but with political and wider UK and Euro zone economic instability and austerity measures coming into play, growing talk of a double dip recession, puts the recent construction figures into another perspective.

This is put further into context by the government scrapping the £55bn school rebuilding programme citing the previous governments failure to fund it, or provide oversight. Irrespective of politics, its a bitter blow for the construction industry.

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