Search Site
News: July 2010
27/07/2010
Predicting the future
Phil Westerman, head of construction at Grant Thornton UK, has commented on the latest (Q1) Office for National Statistics (ONS) data on new orders in the construction industry:
“The ONS’s latest statistics contain relatively positive news for the construction industry. Although the total volume of construction new orders in the first quarter of 2010 rose marginally (by 1%) compared with the fourth quarter of 2009, it has significantly increased by 29% compared with the same period in 2009. This is a step in the right direction for the construction sector and provides some much needed encouragement.
“The increase in construction new orders is indicative that some construction companies appear to be slowly emerging from the doldrums. However, this is not a surprise as the construction sector usually continues to feel the pinch and lag other industries as they come out of recession.
“Despite the positive news, demand for mortgages has weakened over the second quarter of this year and both the government and consumers are expected to tighten their purse strings going forward. Government construction projects will be hit by a reining-in of expenditure across the board and stretched public spending could lead to another big drop in construction activity over the medium term.
“On one hand, the recent Budget proved positive for the construction industry due to its pledge not to cut capital expenditure until the October spending review. However, this is countered by commercial property tenants coming under pressure from higher capital gains tax and VAT. We may therefore see an increase in business failure for small to medium-sized construction businesses later this year.”
www.grant-thornton.co.uk
“The ONS’s latest statistics contain relatively positive news for the construction industry. Although the total volume of construction new orders in the first quarter of 2010 rose marginally (by 1%) compared with the fourth quarter of 2009, it has significantly increased by 29% compared with the same period in 2009. This is a step in the right direction for the construction sector and provides some much needed encouragement.
“The increase in construction new orders is indicative that some construction companies appear to be slowly emerging from the doldrums. However, this is not a surprise as the construction sector usually continues to feel the pinch and lag other industries as they come out of recession.
“Despite the positive news, demand for mortgages has weakened over the second quarter of this year and both the government and consumers are expected to tighten their purse strings going forward. Government construction projects will be hit by a reining-in of expenditure across the board and stretched public spending could lead to another big drop in construction activity over the medium term.
“On one hand, the recent Budget proved positive for the construction industry due to its pledge not to cut capital expenditure until the October spending review. However, this is countered by commercial property tenants coming under pressure from higher capital gains tax and VAT. We may therefore see an increase in business failure for small to medium-sized construction businesses later this year.”
www.grant-thornton.co.uk
Have Your Say
To comment on this news story please contact the editor via the online form.
 |
 |
 |
