Optimism grows across the Construction sector

The Construction sector has suffered more than most from the prolonged downturn in the UK, but signs are starting to look up for what is an extremely important sector to the overall UK economy. The UK Construction Purchasing Managers’ Index (PMI) scored 57.0 for July, up from 51.0 in June – marking the third consecutive month of positive growth, after a slow start to 2013. Order books are now showing consistent growth, which is clearly good news for employees, service providers and construction products manufacturers alike.

In further positive news, Dr. Noble Francis, Economics Director at the CPA (who spoke at the Livingstone Construction sector lunch last year), is predicting additional growth of 2.2% in 2014 and 4.5% in 2015. Dr Francis expects this to be driven principally by private housing, energy and rail infrastructure. Government schemes such as Help to Buy and Crossrail are stimulating growth in housing and rail, and the investment in the UK’s energy infrastructure is essential in order to replace the existing capacity that is scheduled to come off-line.

From Livingstone’s perspective, we are seeing increased interest from strategic acquirers in specialist / technical contractors with particular expertise and skill sets (e.g. M&E, Energy management). Likewise, anyone focused on attractive end markets such as energy, oil & gas, utilities and rail are likely to be of particular interest, as evidenced by the attractive price paid for Interfleet Technology. The Equipment Hire sector has also seen a recent uptick in M&A activity, with acquirers forecasting a strong increase in activity as the sector recovers.

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