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Construction industry set for sharpest decline on record

The construction industry is facing its sharpest decline on record with output and employment set to fall even further in 2009 and 2010, according to a new trade survey.

The Construction Products Association’s first quarter trade survey provides no respite from the current recession, suggesting that the situation is likely to deteriorate across the whole industry.

The decline endured in 2008 is set to be exacerbated in 2009 with decreasing demand in the economy leading to unprecedented falls in construction output and employment.

The key findings are that 62 per cent of building contractors report that output fell in Q1 compared to Q4 2008 and 60 per cent predict output will fall further in the next quarter.

All heavy side manufacturers reported that sales were lower than in the previous quarter and 56 per cent of specialist contractors reported that order books fell in the first quarter of 2009.

The Association anticipates that the construction sector as a whole will fall 12.1 per cent during 2009, the sharpest decline on record and the private sector is expected to endure the worst falls, falling 20 per cent in 2009 alone.

While 2008 saw private housing and industrial sectors suffering, 2009 is expected to see sharp falls in offices and retail new build, with private housing repair and maintenance also set to be hit hard. 

Economics director Noble Francis said: “The worst fears of those in the construction industry look set to be realised.

“With deep recession in the economy weighing heavily upon construction, the latest quarter of output within the industry, covering 2008 Q4, already highlighted the steepest decline since 1980.

“However, the latest construction trade survey suggests that the situation has deteriorated further.”

National Federation of Builders chief executive Julia Evans said: “These are clearly challenging times for our industry and SMEs are battling to overcome incredible odds.

UK Contractors Group director Stephen Ratcliffe said: “This confirms the message the industry has been conveying to ministers over the past three months – that the industry is entering a very difficult period, which will result in many job losses.”