Construction businesses hampered by a shortage of orders

Published:  18 August, 2010

Construction businesses are optimistic about the future, but lack of orders are a real concern.

Research from the company's latest annual International Business Report (IBR) reveals a more positive outlook on the UK economy this year compared to last. Some 37% of those questioned anticipated an increase in profits compared to 32% in 2009, while 43% expect turnover and revenue to increase compared to just 34% last year.

Despite the optimism, 51% still cited a shortage of orders as the greatest constraint for construction and real estate privately-held businesses. Apparent constraints over financing also make growth through acquisition unlikely for many companies, with 84% ruling out any acquisitions for the next three years.

Kathryn Hiddleston, head of construction at Grant Thornton says: "Optimism in the sector has seen a slight increase from 2009 as construction and real estate PHBs show signs of recovering from the very difficult conditions seen last year. However, recovery in the sector will be very dependent on access to finance becoming more available and there is a lot of pressure on the banks to ensure this is the case.

"Despite the optimism, the majority of construction and real estate PHBs still cite a shortage of orders as the greatest constraint, which may worsen if any announcements in the up-coming Comprehensive Spending Review prove detrimental to the sector.

"What also might be worrying for the industry are signs of a decline in property prices which won't be helped by a lowered economic growth forecast in the UK and inflation staying higher than previously forecast."

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