Construction sector likely to remain subdued for 2013 – KPMG

THE construction sector is likely to remain subdued for much of 2013, a leading sector analyst has warned.

Richard Lyle, director in KPMG’s infrastructure practice, said construction indices indicated times were likely to remain tough for the vital sector.

Mr Lyle said the Markit/CIPS Construction PMI backed up the feeling in the market that 2013 was set to continue in the vein of 2012 with order books flat at best or declining as large projects came to an end.

“The most worrying feature is the large decline in new orders.  The industry has been working out their current projects and hoping for an uplift in the pipeline of work.  This has not happened and will put a very real strain on main contractors and particularly the supply chain that relies so heavily on them for their work,” he said.
 
“The real issue is the lack of confidence and funding available for large projects.  Until this changes projects will not get off the drawing board and even then it will be a long time before they are ‘shovel ready’.  
 
“Businesses throughout the construction supply chain will need to really think about how they do business and look to make dramatic changes to remain competitive over the next year or two.”

He said it would be interesting to see what effect if any, the new PFI (PF2) model would have on future orders and if this would drive future growth.