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economic news and contracting market in 2017

Economic Good News Could Bring Cheer To Contractors In 2017

We were cautiously optimistic towards the end of last year about how contractors would fare in 2017 and just one week in we’ve already had a series of good economic news stories that could justify this optimism.

 

Firstly, we saw UK manufacturing growth hit a 30 month high, according to a Purchasing Managers’ Index from Markit and the Chartered Institute of Procurement & Supply (CIPS).

 

Not only did manufacturing defy expectations of a slowdown, but the rates of expansion and output were “among the fastest seen during the survey’s 25-year history,” according to Rob Dobson, senior economist at IHS Markit.

 

This remains qualified good news at this stage, because these findings don’t reflect official figures for the sector from the Office for National Statistics. These showed manufacturing contracted in the months after the Brexit vote and output declined by 0.9 per cent in October.

 

Still, qualified good news counts for something, and these positive manufacturing figures were followed by another Markit/CIPS report showing that the UK construction industry enjoyed the highest growth in new orders in almost a year.

 

Again, we should note warnings that the industry is yet to feel the full brunt of Brexit. Paul Trigg, construction specialist and assistant head of risk underwriting at Euler Hermes, also warns of “concerns the current work pipeline will only carry contractors in the short term”.

 

However, these two qualified good news stories were followed by the Markit/CIPS UK Services PMI report showing that Britain’s largest sector, services, grew at the fastest rate for 17 months since December. And three positive reports in a row seems like an encouraging pattern.

 

Boost from the government

 

We previously noted that the Autumn Statement was short on positives, but the additional funding for large-scale infrastructure projects, which could boost contractor jobs in relevant industries, was promising.

 

These include construction, which received a £2.3bn Housing Infrastructure Fund boost, while a £23bn national productivity investment fund focused on infrastructure was also announced.

 

The combination of large infrastructure projects and positive PMI reports should give contractors in these industries reason for cheer.

 

Here at Contracting Scout, we’ll be looking at how the economic situation is developing across all industries and how contractors can succeed as the economic picture changes.

 

We’d be happy to discuss your contracting situation now and in the future, so do get in touch if you’d find this useful..