Building material producers feel the pinch

The housebuilders’ pain is being refelected by the building material suppliers whose drop off in sales mirrors that of the housebuilding industry.

Building material producers feel the pinch

The Construction Products Association’s latest Industry Barometer, produced with Ernst & Young, and released today, shows a dramatic fall in sales in the second quarter of 2008 for product manufacturers. This is the first time the Barometer has recorded below the “no-change” mark of 50 since its launch two years ago.

Manufacturers of heavy side products such as bricks and blocks are having the toughest time, recording a score of just 25, almost half the score from the previous quarter and one third of the score from two quarters ago. Furthermore, their estimate of sales for the next quarter is predicted to be even lower.

The light side manufacturers are less gloomy as spending in this sector is currently considerably higher, although the expectations are that sales will decline as the economic slowdown impacts upon the labour market and consumer spending.

Dr. Noble Francis, economics director for the Construction Products Association said; “The current economic slowdown is now beginning to impact across the industry. Difficult loan conditions both for companies and individuals have led to a 25% fall in housing starts in the private sector from just a year ago.

“However there are still some bright spots in the industry. Infrastructure spending is still doing well as is the Building Schools for the Future programme. What is important is that the government continues to deliver its capital spending plans as promised. If the government cuts back on this, then the concern across the industry will be much more widely spread.”

About Fiona Russell-Horne

Group Managing Editor across the BMJ portfolio.

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