Tender prices also rose by 0.5% in Q3 2010 compared with a year earlier, the first annual increase in prices since mid 2008.
Material prices rose 2% in the 3rdquarter 2010, making a rise of 8.2% across the year. Certain materials experienced a steep increase during this quarter, including crushed rock, imported softwood and fabricated steel. It is anticipated that materials price increases will rise in line with the rate of inflation over the next two years.
Quarter three 2010 saw a 1% fall in construction employment figures on the previous quarter and a year earlier. Average weekly earnings in the construction industry also fell 0.7% in Q3 2010 compared to the previous year, despite average weekly earnings in the economy as a whole rising 2.2% over the same period. BCIS anticipates wage awards will remain subdued over the next couple of years.
New work output rose by 5% in Q3 2010 compared with the previous quarter and 22% compared with Q3 2009. New work output is expected to have risen sharply in 2010 as a whole, but is expected to fall slightly into 2011 as public spending cuts start to take force, partly mitigated by private sector output starting to recover more strongly. New work output is expected to return to growth in 2012, but with public sector cuts deepening, growth is expected to be sluggish.
Despite the forecast fall in new work output for 2011, the significant rise of output throughout 2010 means that 2011 will remain in the order of 10% higher than 2009 levels, but still 6% lower than the pre-recession levels seen in 2007, BCIS said.
Construction orders have been falling for the last four quarters pointing to the slowdown in workload expected in 2011.
BCIS information services manager Peter Rumble said: “Despite new work output expected to dip in 2011, it is anticipated tender prices will be driven by, and move in line with, rises in input costs over the next two years. A recent BCIS survey of contractors shows that the majority expect tender prices to remain static over the next six months, while BCIS anticipates stagnation in tender prices in the last quarter of 2010 before a slow upward trend returning in 2011. Uncertainty remains for the industry, with it being reliant on the pace of a private sector recovery.”
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