A brief overview from our Managing Director of current sector conditions
For those of you who prefer to view their glass as half full (and unfortunately I’m one of them), activity on the ground is buoyant and demand remains strong across the industry. But there are also current supply chain issues that may only get worse due to sharp increases in energy costs, pushing materials and product prices up even further.
The key to the industry outlook will be the extent to which supply can meet the high level of demand.
The market has been remarkably resilient in recent years despite the disruption caused by the global pandemic and the end of the Brexit implementation period. Certainly for this winter, resilience will be critical in the face of the rising cost of living on households’ spending decisions, business investment decisions and the wider economy.
..and yet, major analysts still forecast construction industry-wide growth of 2.8% in 2022 and 2.2% in 2023. Indeed, all construction activity forecasts remain up for short to medium term. It’s not just the house-building sector that continues to drive this; infrastructure output is forecast to grow 8.8% this year and a further 4.6% in 2023. Projects like Thames Tideway, the continuation of Hinkley C and of course HS2 add some stability to structured programmes and framework planning. All of the aforementioned are part of rail, water and energy five-year spending plans.
So what does this mean for us; CP Hire?
Well, our utilisation rates are as high as they’ve been since COVID was first introduced to our lexicon. Demand across all products remains strong. This may, in some part, be linked with a recent race to off-load assets and equipment by some contractors who look to turn machines into cash, thus hiring as a replacement.
The continued demand for houses rather than flats with consumers wanting more significant properties with added space further increases equipment demand. House price growth is anticipated to be around 6% this year and likely to be 2.5% hire again next year. This I hope will give the wider market further confidence to continue its investment, but then again I am glass half full.
Source: reflections, opinions and statistics – John Rawnsley Managing Director CP Hire GB, parliament.uk, Construction Products Association, BDO LLP.
