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Construction workloads still falling

Construction workloads have fallen for the ninth consecutive quarter, the latest quarterly trade survey from the Construction Products Association has revealed.

The survey suggests that 20 per cent more firms reported falling workloads than reported an increase, during the second quarter of 2010.

The CPA survey is at odds with recent figures released by the Office of National Statistics, which said the construction sector grew by 6.6 per cent in the second quarter of 2010.

But number of construction product manufacturers reported relatively poor anticipated sales, order book levels and enquiries, which suggests that the industry could suffer further during the second half of 2010.

In a continuation of what has been a perfect storm for many construction firms, materials prices have continued to increase, while tender prices have remained on a downward track. This has had the effect fo reducing profit margins within the industry.

Manufacturers of both light and heavy side construction products see un uncertain few months, with 55 per cent of light side manufacturers and 61 per cent of heavy side manufacturers are anticipating a fall in sales or no change
in the next quarter.

CPA economics director Noble Francis said: “Over the next few years, construction is braced for a fall in public sector investment and will increasingly need to look to private sector for growth.

“It is critical that capital investment is focused on those areas such transport, energy, and other key infrastructure projects, that will do most to stimulate the wider economic recovery.”

National Federation of Builders chief executive Julia Evans said: “The industry’s rush to finalise schools projects before spending was cut, as well as the need to play catch-up following the severe weather in the early part of the year have provided impressive headline growth figures.

“The underlying picture is not so bright. Factors such as flat mortgage lending, lower levels of lending to construction companies and a planning system in transition put any tentative signs of growth at risk.”

 

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