Is the industry ready for a sharp increase in employment?

While the overall economy grew in March, construction production moved in the opposite direction, leading to disturbing headlines. However, in rainy years, it is difficult to gather much information about the status of first quarter data. Perhaps more interesting was the official data on new orders, which showed an increase in the first quarter of 15.9%. compared to the end of 2023.

The data goes back to the second quarter of 1964, when Alec Douglas-Home was Prime Minister and the Beatles were embarking on their first and only world tour. Of the 240 quarters recorded since then, only eight have shown greater growth in new orders than in the first quarter of 2024. Again, it would be wise to exercise caution when interpreting this extraordinary statistic. While some historic gains sparked a construction boom, others reflected only a short-lived recovery from economic shocks and recessions.

The current situation seems to fall into the latter category. However, a large increase in orders is still an increase in orders. Outside of public buildings (which have fallen by more than half), customers – especially those in the private sector – appear to be dusting off their checkbooks.

The experience of recent global black swan events means that nervousness remains high. However, if the order flow translates into fulfillment, it is at least possible that the final months of this year will mark the beginning of a period of desperately needed sustained growth in the industry.

However, one factor remains uncertain – the industry’s ability to respond to the economic recovery. It has been eight years since Mark Farmer, in his review of the UK construction model, warned that Brexit meant the industry could no longer rely on migrant labor to rapidly expand its workforce when needed. Due to reduced demand post-Covid, his theory has yet to be tested.

Construction is not the only industry that feels the effects of the post-Brexit crisis, but this sector faces specific challenges – including the erroneous belief that construction is “dirty” work. In addition, of course, there are the financial rewards and rewards for job satisfaction offered.

Without a reliable flow of labor from the continent, upskilling the country’s domestic workforce will be a key part of meeting growing demand.