Boom or Bust?

Lafarge Tarmac’s Dr Bill Price looks at the current state of the construction industry

Yet again, the media is full of stories about how construction activity has slowed and how construction is acting as a brake on the expansion of the economy.

Do you think that this is a true representation of the sector? I don’t know about you, but the bit of the industry that I am working in doesn’t feel at all slack, in fact quite the opposite!

In addition to this, we also get articles reporting that optimism in the construction sector has climbed to its highest in over a decade. There seems to be a bit of a mismatch here, so what is going on?

One explanation could be a sense of relief that the General Election did not result in a hung Parliament and that this sense of stability may just be the trigger for releasing funds for development, particularly in civil engineering. The key however, is to convert ‘optimism’ and ‘rebound’ to actual bricks and mortar rising from the ground.

The main clouds on the horizon are likely to be the return of uncertainty about the results on an EU referendum as the campaign starts in earnest and the impact of austerity on government spending. Can the private sector take up the slack? Service industries still need offices and the retail sector still needs distribution facilities, which in turn need to be built.

On a brighter note, the rapidly improving weather (ignoring recent gales and storms) usually heralds an upturn in housing and small building activity, which should be seen as increased sales in the Merchants. House prices are still high (although price increases have slowed), which would suggest that there is still a demand for new houses.

Surveys are suggesting that DIY is losing its popularity, particularly among younger homeowners, which means that professional builders are more likely to be called in to carry out the traditional DIY activities. This could be another positive step.

As the saying goes, there is nothing as certain as uncertainty, and the building materials sector will continue to adapt to changing circumstances, as it has done in the past. There is a fine line between gearing up for an expansion that doesn’t happen and failing to anticipate one that does. My take is one of qualified optimism, I just hope I am right.

About Guest Blogger - Bill Price

Bill Price is National Commercial Technical Manager at Tarmac’s Cement business

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