Construction decline expected to continue

The construction industry is likely to decline further in the second half of 2010, according to the the latest Construction Trade Survey from the Construction Products Association.
The findings show that building and civils contractors experienced falls in output in both the first and second quarter of 2010, while all sectors of the industry are reporting poor sales, order books and enquiries. This is on top of last year’s sharpest fall in 35 years.

Both light and heavy side manufacturers are seeing a mixed picture in terms of forward business, with 61% of heavyside manufacturers anticipating either no change or a fall in sales in the second half of the year.

Building contractors’ workloads fell again during the second quarter of 2010 and output has now been falling for nine quarters, with 20% of building contractors, stating that workloads fell compared to a year ago.

After falling 27% in 2009, workloads continued to fall in the commercial sector with nearly 30% of building contractors, reporting that workloads on commercial projects had fallen, despite work going ahead on a few major high profile projects in prime areas of Central London.

Noble Francis, economics director at the Construction Products Association said: “Over the next few years, construction is braced for a fall in public sector investment and will increasingly need to look to the private sector for growth. It is critical that capital investment is focused on those areas such transport, energy, and other key infrastructure projects, that will do most to stimulate the wider economic recovery. However, despite this uncertainty, the manufacturers are continuing to invest in product improvement.”

Julia Evans, chief executive of the National Federation of Builders said: “The industry’s rush to finalise schools projects before spending was cut, as well as the need to play catch-up following the severe weather in the early part of the year have provided impressive headline growth figures. The underlying picture is not so bright. Factors such as flat mortgage lending, lower levels of lending to construction companies and a planning system in transition put any tentative signs of growth at risk.

“Given the significant contribution that construction made to the overall growth in UK GDP in Q2 2010, we can only hope the government takes into account the resulting benefit to the wider economy of a sustained, and sustainable, level of investment in construction when it makes further decisions on spending.”

About Fiona Russell-Horne

Group Managing Editor across the BMJ portfolio.

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