Construction falls but with positive signs

The latest Construction Trade Survey published today (May 8) shows that construction continued to suffer during the first quarter of this year.

However, there were some positive signs for some parts of the industry.

Orders show that conditions are likely to get worse during 2012 with the full extent of public sector cuts yet to be fully realised. Yet, there was an improvement in industry conditions for some contractors in the first quarter, with projects to extend and improve the country’s rail network and increase energy capacity providing a boost.

Noble Francis, economics director at the CPA said: “It’s good to see that some companies are benefitting from schemes such Crossrail, Europe’s largest construction project, and projects in the energy sector such as nuclear and renewables.

“Yet, government cuts have begun to hit many parts of the construction industry and public sector construction will only deteriorate further given the scale of the cuts. Private sector construction is not growing quickly enough to offset this, especially with the largest construction sector, private commercial slowing.”

Stephen Ratcliffe, director UKCG, said: “Market conditions remain challenging but we must not lose sight of the fact that there is still a £100 billion per annum market in construction. The opportunities could be more evenly spread – between both north and south and infrastructure and building.

“Central Government could help in getting on with delivering the much delayed school building programme and more local authorities need to wake up to the fact that investment in infrastructure means local growth and jobs. The Local Government Association’s rejection of the benefit of publishing a pipeline of infrastructure investment shows how out of touch some local authorities are with the need to work harder to deliver investment and growth.”

Julia Evans, chief executive of the National Federation of Builders added: “Construction orders are falling and costs are rising. Public borrowing levels are still high and government departments are bracing themselves for another round of spending cuts. We are not looking at a recipe for growth but at another challenging quarter when bank holidays, Jubilee celebrations and the Olympics will all affect productivity, making it unlikely that Q2 and Q3 figures will be any more encouraging than those for Q1.”

Key survey findings include:

· 19% of large and medium sized building contractors, on balance, stated that workloads reduced, on an annual basis in Q1 (compared with 2011 Q1).

· Orders weakened compared with the last three months of 2011 according to a quarter of large and medium sized building contractors, on balance.

· 21% of SME builders, on balance, saw workloads reduce in Q1.

· 3% and 17% of specialist contractors stated that, on balance, orders and enquiries rose in Q1.

· Employment prospects are subdued for large, medium and small building contractors but manufacturers and civil engineers expect to increase headcount.