Back in June, the UK voted to leave the European Union in a historic referendum. There have been many debates over how the country will respond to the Brexit result, and some sectors have already experienced a decline.
In fact, this week, the BBC said that the value of the pound fell by 0.9%, and this decline could have been caused by the uncertainty surrounding the UK economy. With the economy hanging in the balance, how has the construction sector coped in keeping its head above the water?
Construction Sector Growth
Despite the initial shock of the Brexit vote, the construction sector has been projected to grow in the coming months. Figures gathered from IHS Markit and CIPS back up this theory. They measured the construction sector’s expectations for growth in September and produced a figure of 52.3. Any figure above 50 indicates growth, and this is a really encouraging sign for the sector – especially when you consider that August’s figure came in at 49.2.
Markit and CIPS then go on to say that September’s forecast indicated the fastest rise in the construction sector since March. This statement may be surprising to some, considering some companies in other sectors have threatened to move their UK operations abroad if the country leaves the single market once Article 50 has finally been triggered.
Why Are We Seeing Growth?
Despite September’s forecast still being lower than in previous years, it still shows that the construction sector is one of the few industries fighting against decline at the moment, but what has caused this rather surprising turnaround in fortunes?
Well, Markit and CIPS have said that the rise is due to the demand for residential building work and an increase in civil engineering activities. It appears that now could be a great time to renovate your home, so if you’re looking for a new build, loft conversion, foundations or an extension, feel free to contact the team here at Amatrix to get further free advice.
Commercial Construction Is Still Struggling
While the other strands of the construction sector are returning to health after the Brexit vote, the commercial construction sector is struggling and has seen its forecasts decrease for four consecutive months. Brexit could have played a role in this decline because investors could be waiting to find out what sort of deal the UK is going to negotiate with the rest of the European Union before setting up or expanding their businesses here.
Commercial construction companies might also be affected by the weak pound. It could become more expensive to import raw materials from abroad than it was before the vote, and this could lead to increased costs being passed on to the customer. Coupled with the overall reluctance by clients to invest in commercial property, it does paint a gloomy picture for the sector.
The same could be said for the residential sector, but the demand for housing and the desire to invest in home improvements will always be at a substantial level – meaning companies working in this strand should be able to offset the rising overheads more easily.
If you have any questions regarding this blog, feel free to contact a member of our team who will advise you further!
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