For all our advances, weather forecasting is still an inexact science, trying to divine whether it’ll rain or shine in a week’s time based on fluctuations in pressure and other factors. And sometimes readings and reality don’t match up.
In construction, industry watchers are currently tapping their barometers to try and figure out whether the recent bad conditions that the data says construction is going through are passing by or setting in.
Last week the industry technically entered recession after the ONS revealed output had fallen for the second quarter in a row in Q3.
After 2008 and the long recovery, the ‘R’ word is a frightening one.
But writing from the Construction News office on the edge of the City of London I can see plenty of cranes working on commercial and residential developments, while building fronts near the office are covered up with hoardings.
Go to other cities around the country and it’s likely there will be a similar smattering of cranes.
And I’m not the only one struggling to reconcile the data with what I can see.
Mel Budd, director at market research company Leading Edge, says that, based on anecdotal evidence, “it doesn’t seem to be as bad as the figures suggest”.
So is the data wrong? It depends where you look.
“Next year, if you’re in housing or infrastructure you’re okay; anything else you’ve got to tighten your belt a bit. It doesn’t look too good,” Mr Budd explains.
Infrastructure, with its long project timelines, and housebuilding, with the increased political backing, have forecasts that are expected to grow.
Commercial building, however, the second-largest sector by value after housing, is facing a tough time, and the sector’s poor performance could be longer lasting as we’re about to see the impact of Brexit.
The construction output reflected in the stats suggests the recession was largely from projects signed up to before June 2016.
CPA economics director Noble Francis says there’s about an 18-month lag between new orders being signed and work starting on site.
Commercial building, specifically for offices and retail, relies much more on the private market for initiative to develop and confidence to invest, so 16 months on from the EU referendum we’re about to see how much construction activity really slowed.
Experian head of construction futures James Hastings says the outlook is not bright: “Investors and developers are still being cautious with what they want to bring forward; quite simply because we’re in a situation where we don’t know what Brexit is going to look like.”
Unless the government performs an incredible turnaround, that uncertainty doesn’t look like it’s going to be addressed any time soon.
The cranes on the skylines and hoardings on the ground for commercial projects signed up to pre-referendum will soon start to come down, and the data suggests there will be fewer new ones going up.
Forecasts for what’s in store for construction are a mix of sunshine and storms, depending on where you are. What’s for certain is, that for those in commercial development, it’s best to be prepared.
Source: Construction News