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Decline in civils workload decelerates

11 Aug 11 After 13 consecutive quarters of declining workload, there are signs that civil engineering contractors may soon have reached the bottom of the trough.

New figures from the Civil Engineering Contractors Association (CECA) suggest that the workload of civil engineering contractors may be starting to stabilise.

The figures, collected for the second quarter 2011 CECA workload trends survey, show that the difference in numbers of firms reporting growing workload versus shrinking workload year-on-year has diminished to -9 percentage points. In the Q1 2011 survey the difference was -27 percentage points.

This improvement offers hope that there may even be a return to growth in the not too distant future, CECA said.

Across almost all categories the survey seems to suggest a stabilisation in market conditions for civils contractors, with rates of decline slowing across most sectors of work, most sizes of firms, and most areas of the country.

However the figures also show the squeeze between rising costs and falling tender prices continue to put pressure on contractors’ margins, with an overwhelming 78% of respondents noting that costs were higher in the second quarter of 2011 than a year earlier.

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Orders in airports, railways, electricity and water & sewerage rose, while communications and gas fell, and highways work tanked.

CECA director of external affairs Alasdair Reisner commented: “Optimism has been in short supply in construction for some time now, and justifiably so. But these latest figures do offer some grounds for hope that a return to growth may be on the cards in the next quarter, potentially ending 13 straight quarters of decline.

“We must remember that the survey still shows industry activity falling, but the rate of the decline is now at its lowest since workload began falling in the second quarter of 2008. CECA is increasingly optimistic about prospects for contractors to find work in the growing energy, rail and water sectors, and we’re helping to offer our members guidance to enable them to win work in these growth areas.

“But any gains could still be wiped out if cuts to public investment in infrastructure have the impact many fear is imminent. For that reason any suggestion of a recovery in the infrastructure sector is premature.

“Nonetheless we hope that positive figures in the second half of the year may start to build confidence that the industry is getting back on its feet.”

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