Unexpected Growth for Construction

New Watchdog Report finds unexpected growth for the Construction sector in Q2 2018

The UK construction industry is showing signs of growth as it gets back on track after a turbulent six months, according to figures released today in the Creditsafe Watchdog Report. The number of new companies has risen by over one fifth compared to the same period a year ago, introducing 16,891 new companies to the sector in the second quarter of 2018.

Despite the challenges facing the sector after the collapse of construction giant Carillion, the new data shows that the number of active companies increased by 15.6% year-over-year, from 357,886 to 413,626. Employment also rose by 49.5% over the last year, and by 14.1% in the last quarter alone, bring the total number of employees to 1.3m. Total sales are up 1.0% over the last three months to £296bn.

Similarly, while the industry is still feeling the after-effects of Carillion’s insolvency throughout the supply chain, bad debt – both the volume owed to and by the construction sector – has fallen by 39.4% and 46.7% respectively over the last year. This is despite the recent failures of Ikon Construction, which ceased trading in May, and Scottish-based Crummock, which entered administration in June.

Although there has been a fall in the number of failures over the last quarter by just under 5%, compared to the same period a year ago the industry is still lagging behind. There were 888 failures in Q2 2018, an increase of a quarter over Q2 2017 when there were 710 failures. Total sales were also down 3.1% year-over-year, suggesting that while there are positive signs for the sector, there is still progress to be made.

Chris Robertson, UK CEO at Creditsafe, commented: “After an unstable period for UK construction companies, it seems that we are now seeing a return to growth. With positive indicators this quarter showing a fall in failures, coupled with a small but defiant increase in active companies, the sector seems to be getting back on track. However, the full effect of recent construction collapses on the supply chain is still yet to be seen and businesses need to doing their due diligence and protecting themselves from potentially risky partnerships.”

Creditsafe’s Watchdog Report tracks quarterly economic developments across Construction and 11 other sectors (Banking & Financial, Farming & Agriculture, Hospitality, IT, Manufacturing, Professional Services, Retail, Sports & Entertainment, Transport, Utilities, Wholesale).

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