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Confidence wanes across construction industry

10 Nov 10 Confidence among construction product manufacturers and contractors for the remainder of 2010 is dwindling, according to the latest Construction Trade Survey.

The research from the Construction Products Association is in sharp contrast to the positive growth figures reported by the ONS earlier in the month, which indicated that construction enjoyed growth in the third quarter of 2010.

Key survey findings were:

  • 10% of light side manufacturers and 29% of heavy side manufacturers endured a fall in sales during the third quarter if 2010
  • 22% of contractors reported a drop in output in 2010 Q3
  • 95% of light side manufacturers and 92% of heavy side manufacturers reported higher unit costs in the third quarter of 2010 than one year earlier, driven by rises in raw materials and energy costs
  • 51% of building contractors reported that tender prices fell during the third quarter of 2010 compared to the previous quarter
  • 88% of light side manufacturers and 36% of heavy side manufacturers reported that employment fell in the second quarter of 2010.
  • 19% of light side manufacturers and 18% of heavy side manufacturers stated that employment was likely to fall further during the year ahead

Stephen Ratcliffe, director of the UK Contractors Group, said: “This survey paints a picture quite different from the official growth figures which suggest – wrongly in our opinion – that construction is the engine driver of economic recovery.

“Whilst there are still good opportunities – notably infrastructure – the outlook remains uncertain. The new government has made a good start in setting out its public sector investment plans but the whole picture has not yet been filled in – for example the energy white paper is not due out until Easter next year – and there are real concerns that the decentralisation of decision making will slow up both the planning and procurement of new public sector investment projects.”

Noble Francis, economics director at the Construction Products Association said: “The Trade Survey for 2010 Q3 highlights that the environment for contractors and product manufacturers is still extremely challenging, especially given that the public sector accounts for more than one third of total construction output and therefore the cuts announced in the CSR will inevitably have considerable consequences for the industry over the next two years.

“Although product manufacturers enjoyed a rise in sales in 2010 Q2, boosted by restocking, this was not replicated in Q3 and sales of both light side and heavy side products fell.

“Looking forward, due to the great uncertainty in the economy and in particular in construction, product manufacturers are very unsure. Despite a number of high profile contracts being let within the commercial offices sub-sector in central London, 71% of contractors, on balance, reported that order books fell in the third quarter.

“Of great concern, in the light of the CSR, 67% of contractors, on balance, reported that order books fell in the third quarter in public non-housing, which covers education and health construction.”

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