News for Tool Hire, Equipment Hire & Plant Hire and Rental Professionals

Looking optimistic

6 February 2023

Looking optimistic

First, a quick fact from the world of classics to set the scene. 

Janus was the Roman god of beginnings, transitions and endings, and it is how the month of January got its name. He is usually depicted as having two faces, with one gazing back and the other looking forward, contemplating the old and new years. 

So it is perhaps fitting that the statistics for January in the respected Purchasing Managers’ Index (PMI) produced by S&P Global and the Chartered Institute of Procurement & Supply (CIPS) portray a mixed picture.

On the one hand, UK construction companies reported another downturn in business activity during January, largely reflecting weaker demand and fewer new projects starts in recent months. On the other, however, business expectations regarding the year ahead rebounded considerably since December 2022, with confidence reaching its highest level for six months. 

Survey respondents noted that the general economic outlook appeared to have improved, while some cited tentative signs of a turnaround in sales enquiries. 

House building (index at 44.8, with 50.0 as the neutral no-change threshold) was the weakest-performing category of construction output in January, with the rate of contraction the steepest since May 2020. Lower volumes of residential work were attributed to rising borrowing costs, unfavourable market conditions and greater caution among clients.

More positively, looking ahead around 43 per cent of the survey panel anticipate a rise in business activity over the coming year, while only 17 per cent forecast a decline. The resulting index signalled a sharp rebound in business expectations from the 31-month low seen in December 2022. 

Construction companies often commented on improved sales pipelines and hopes of a turnaround in new orders. Some firms cited optimism that confidence would eventually return to the housing market over the course of 2023, assisted by a stabilisation in borrowing costs. 

The Bank of England suggested last week that the UK economy might have turned a corner regarding inflation and interest rate pressures, and that any recession could be shallow and shorter-lived than anticipated. With the PMI reporting growing confidence amongst construction firms, one can imagine the Roman god Janus looking forward with a face showing cautious optimism. 

Photo: JCB 

● Don’t forget to explore the Site-Eco area of the blog for news of sustainable products and developments relevant to the world of hire. 

Subscribe

I am constantly adding new content. If you subscribe FREE using the form below, I'll send you my weekly bulletin summarising the latest hire industry stories - and I'll also send you a PDF of 10 fascinating interviews with national and independent hirers, giving their views about business and their secrets of success!