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What Now for Construction Jobs in the UK?

Posting date: 3 June 2019
Edward Collins our consultant managing the role

What Sector Data Tells You About Construction Jobs in 2019?

The number of construction jobs in the UK fell for the first time in more than two years in April 2019, despite the first increase in constructions output since January. Is this decrease in jobs numbers a sign of things to come, or merely a Brexit blip that will soon be forgotten in the coming months?

Housebuilding - Your Ace in Construction

The headline number for construction in the UK as reported by the IHS Markit/CIPS UK Construction Total Activity Index rose from 49.7 in March to 50.5 in April. This is the first time since January that the index, which used to be called the Purchasing Managers’ Index (PMI), has increased. It marks a welcome return above the neutral threshold of 50.0 and into growth territory, even if it is only marginal.

However, the headline number masks underlying weakness in the commercial and civil engineering sectors, which both continue to languish below the 50.0 mark. Again, though, while in decline, the rate of decline in these sub-sectors has decreased, bouncing off their short-term lows witnessed in March 2019. This bounce may be short-lived as:

  • The employers surveyed reported an overall decline in optimism
  • New orders fell for the first time in 10 months
  • Workforce numbers fell for the first time since July 2016

It was housebuilding that pushed the index into positive territory. Growth here hit its highest level this year, with respondents to the survey saying that they are experiencing robust demand and a good stream of new buyers.

Brexit Anxiety in Commercial Construction

The commercial sector has been the weakest of the three throughout the year to date. The RICS and Macdonald & Company Rewards and Attitudes Survey 2019 found that the construction sector is positive despite the Brexit shadow. However, several firms blamed the weakness in commercial construction output in April on a combination of Brexit concerns and delays in spending decisions.

Meanwhile, civil engineering activity decreased marginally in April. Some survey respondents cited a lack of new work to replace completed infrastructure projects as the major factor in this decline.

Fewer tender opportunities for construction companies were blamed on political uncertainty, lower projections for economic growth in the UK, and lower demand for commercial property.

Weaker Demand Lead to a Dip in Jobs in Construction

After two and a half years of unbroken growth, the number of construction jobs dipped slightly in April. Lower sales volumes and the downturn in business optimism were the main reasons put forward for this decline.

Could Construction Material Supply Be a Problem?

Perhaps most worryingly, the survey uncovered difficulty in supply chains and an uptick in the prices of raw materials, despite subdued demand for raw materials. Supply chains are stretched, vendor lead times are the longest they have been since February 2015, and construction companies reported on low stocks and capacity constraints. This has led to the highest rate of input price inflation since November 2018, with prices rising for the third consecutive month.

Adding to pressure on margins, construction businesses reported an increase in rates charged by sub-contractors in April.

What This Means for Construction Jobs in the UK?

The uptick in the IHS Markit/CIPS UK Construction Total Activity Index would normally be a signal for celebration. However, there is plenty to preoccupy the sector. Despite all three sub-sectors moving higher on the index, the weakness in the commercial and civil engineering sub-sectors is a cause for concern.

Political uncertainty cannot be discounted, though we think that Brexit may not be the primary cause of anxiety in this theme. Theresa May has said that she will resign as prime minister, but has yet to declare a timetable. (May 2019) It seems likely that this change in leadership will happen this year, and this could put more pressure on calls for a general election.

A change in government – or, as seems equally likely, especially with the Brexit Party polling strongly, labour reluctant to commit, a hung parliament – could signal different and unknown plans for current proposed infrastructure projects.

Currently, we consider residential to have the strong fundamentals for continued growth. It is underpinned by strong demand for new homes, incentives for first-time buyers, and low mortgage rates. The availability of subcontractors has worsened, and with low stocks at suppliers, lead times for construction may worsen as capacity pressure starts to build.

Edward Collins, Construction Recruitment Expert

The dip in optimism and construction jobs may be more to do with sentiment than fundamentals. Should new orders bounce into positive territory in the coming months, construction firms will need talented and qualified employees to take advantage.

For now, hiring strategies may be a little more subdued. However, there are currently (and will continue to be) exciting opportunities for skilled staff in the construction sector. For the time being, the best of these may be in residential; though, as we move through 2019, we think that commercial and civil engineering jobs will also pick up. The pace of jobs growth in the sector is likely to be determined by the amount of political uncertainty in Westminster.

For a confidential discussion about your career and the best construction jobs, get in touch with the Building & Construction recruitment team, and see why we're RICS’ preferred recruitment partner.

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