With a cautious return to growth it is important to keep informed of changes in the construction market and its sectors. With this in mind this blog looks at how to use construction market forecasts to inform your business strategy.
An overview of UK construction the industry today:
Construction is a key sector for the UK economy. Recent data published shows that the UK construction industry accounts for 6.7% of the UK economy as a whole, contributing nearly £90billion.
Construction provides employment for 2.93 million people, which is about 10% of total UK employment. The UK construction sector breaks down into:
- 234,000 contractors, employing 2,030,000
- 30,000 services; professional and supply, employing 580,000
- 18,000 product manufacturers, employing 310,000
The UK has the sixth largest green construction sector in the world. Around 60,000 jobs are expected to be supported by the insulation sector alone by 2015.
How UK construction forecasting works:
There are several different ways forecasts are calculated. The majority of forecasters will look at historic data from The Office for National Statistics (ONS), and then take data for the broad economic projections, seasonal trends and news of new projects and initiatives including the recently introduced Government Construction Pipeline. Generally there will be a forecasting panel who will also apply their experience.
The principal construction forecasters are Experian Economics and The Construction Products Association (CPA). In addition there are also a number of smaller specialists such as Hewes & Associates. These forecasts look several years into the future and can be very detailed across sectors of the construction industry, and are usually updated and published quarterly. Remember to take into consideration that forecasts differ depending on their sources of information and attitude to promised initiatives happening.
Other forecasts such as those from Glenigan and Barbour ABI are fact based measuring changes in planning applications in the construction industry. These are shorter term and tend to only forecast forward into the coming 12 months, yet are updated more regularly. These forecasts can give a more detailed view of what will happen within the construction industry in the short term.
UK construction making the most of market forecasts:
It is important to keep informed of changes in the construction market and its sectors. Monitoring changes and understanding industry forecasts can help inform your strategy, making sure you are well placed to make the most of new opportunities.
‘It is important to know which sectors are growing and specifically which are growing the quickest. This is where the opportunities are.’ Noble Francis, Economics Director at the CPA
Forecasts we can help you to reduce uncertainty and benchmark your performance against the sectors you operate in. As construction activity increases, you might see a 3 per cent increase in your business. Is this good or bad? If the market has grown by just 2 per cent it is very good. But if the market has increased by 5 per cent then you are losing share and missing opportunities. Suddenly that 3 per cent increase does not look so good.
Forecasts can also inform your sales and marketing strategy, ensuring you are well placed to meet an increase in demand. They can confirm if you are operating in the right market sectors and help you identify new market sectors to move into and which customers to target. To be effective it is not good enough to just look at the figures published by the CPA or Experian; you need to understand how individual sections of the market will impact your business. For example, you might have more success with projects in retail than in education. So although spending on education is expected to increase in the next couple of years, a small rise in retail activity might have much more impact on your business.
It is important you understand your own business for each sector, what proportion of projects have a need for your services? For each project, what business value does it represent to you? Combine all of this information and you can start to create a forecast for your own business: a forecast that is much more specific than just overall market activity and will help you to plan your own resources.
Competitive Advantage can provide a construction market forecast with quarterly updates tailored to the opportunities in your sectors. This exercise is relatively low-cost and can help you anticipate any potential threats and indeed be well placed for new business opportunities. Contact us to find out more.
- Regularly reviewing construction forecasts can help you to:
- Clearly identify the future demand for construction goods and services
- Identify trends in the construction market ahead of competitors
- Benchmark your performance against the market
- Evaluate market size and opportunities
- Identify key customers
There are a number of industry forecasts which are published on a regular basis, a summary of these and other free market information can be found on our useful links page. The more well-known construction market forecasts are published by the Construction Products Association (CPA), Experian Economics, Glenigan, Barbour ABI and The Office of National Statistics (ONS) is the official source of historic data .
Our eNews offers an overview of market activity every month.
And we can provide a construction market forecast tailored to the opportunities in your sectors. This exercise is relatively low-cost and can help you anticipate any potential threats and indeed be well placed for new business opportunities. Contact us to find out more