Unlikely construction industry will improve, says report

The construction industry is expected to 'worsen', according to a new report by Liverpool-based independent invoice financier Bibby Financial Services.

In the first of a series of quarterly reports aiming to reveal key findings about the UK economy and, in particular, the construction, manufacturing, wholesale, transport and business service sectors, Bibby Financial Services has compiled a Business Factors Index.

The report tracks small business turnover over the past two years and the trends derived from this data have been collated with the results of a series of interviews conducted with more than 300 business owners across all sectors.

Within the construction sector, results have shown:

• 68% state that business is worse than a year ago
• 51% felt activity has waned in the past six months
• 34% describe trading conditions as 'tough' and are barely surviving
• 23% felt conditions will worsen during the remainder of the year
• 15% have had to cut back operations in some way, which is nearly one in seven
• 12% are concerned that the recovery of the construction industry will lag behind other sectors but 14% expect the recovery to come sooner for them than other industries

However, and more encouragingly, around 36% of the construction respondents remain positive for the future, one in five felt conditions will improve before the year is out and 2% think recovery will be dramatic.

Jason Heath, construction finance specialist at Bibby Financial Services, said: "While the downturn is now well established, the Index highlights how its impact has been staggered, with some sectors only just hitting the bottom of the curve compared to the construction industry which saw an immediate impact. Perhaps more revealing, however, is the array of attitudes in relation to a recovery."

Within the other sectors, the Index report showed:

• The wholesale sector has been one of the top performers over the past two years but now appears more cautious than other industries
• Despite faring consistently throughout the recession, the mood now among SMEs in the transport and storage sector remains gloomy due to problems with legislation and increasing costs
• Recovery of the business services sector is lagging behind other industries, indicating the delayed impact of the recession on budgets moving into the new financial year