Infrastructure growth boosts construction sector's 2018 performance

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Mace’s latest tender cost forecast for the UK construction sector has been published today. The research shows that the performance of UK infrastructure construction growth improved significantly over 2018, rising to its fastest rate since 2015. 

Output in the housing sector also hit new record highs, following a reduction in private housing construction in Q2 2018. Overall, the sector saw a 2.1% expansion in the third quarter. 

Across 2018 as a whole, there was a slight uplift in construction tender prices – but only a marginal one. Despite increases in labour and material costs, contractors and sub-contractors have managed to absorb the majority of increased costs. While the market is incredibly busy, developers and clients have also managed to keep close control of these increases. 

However, the uncertainty surrounding the final result of ongoing political negotiations around Brexit mean that the forecast for 2019 and beyond is uncertain, but is unlikely to produce any significant price increases. Moving into 2019 there is more uncertainty about the British economy than at any other point in recent times. Survey data shows that there is caution about the next year and this will hold back any surge in tender prices. 

On that basis, Mace has left its future predictions unchanged for 2019, 2020, 2021 and 2022. These are as follows: 

 2018    2019  2020    2021   2022
 National  1.5% 1.5% 2.0% 2.5% 3.0%
 London  1.0% 1.5%  2.0% 2.5% 3.0%

Steven Mason, Managing Director of Mace’s Cost Consultancy, said: 

“2018 continued to be a year of mixed messages and contradictions, with strong third quarter growth in the construction sector and easing material and wage growth being tempered by the continuing sense of unease and uncertainty around the strength of the UK economy in 2019. 

“Despite this sense of deja-vu and caution in the market place, we see no sign of input costs going down and continue to expect a small increase in tender prices in the year ahead.”

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