Lack of labour and materials means a tough start to 2014

Richard Threlfall, Head of Infrastructure, Building and Construction, said: “We predict the first half of the year will be tough, not because demand will be slow but because it will pick up too quickly for an industry which has lost 20% of its capacity over the last five years and where consequently the supply chain is weak.

“At the moment we are observing shortages of bricks, blocks, timber, aggregates and also of skilled labour across the sector.

“However, more capacity in the supply chain will be opening up every day, but it will be the second half of the year at the earliest before supply catches up with demand.

“Until then the power will remain with the supply chain. Tier 1 contractors will continue to feel the squeeze, particularly those who chased volume during the recession and were left with wafer-thin margins.

Threlfall added: “Construction is a sentiment-driven industry and sentiment in the sector is clearly on the up. Higher GDP projections of 1.4% for this year and 2.4% for 2014 are indicative of the pace at which the recovery is accelerating.

“The construction industry usually overreacts like no other to the promise of better times.

“That reaction can already be seen in our housing market where demand is far outstripping the ability of housebuilders to deliver but it will be seen soon across other industry segments as well.

“We don’t expect any more major failures – those who survived the recession are all too big to fail – but life will remain tough in the short term.”

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