UK construction picture remains bleak

There is no respite whatsoever from the downturn in the UK construction sector, which is likely to mean the lowest output for 30 years.
That’s according to the latest State of Trade Survey from the Construction Products Association and the Construction Conferedation for the last quarter of 2008.

The survey, which looks at output from both manufacturers and contractors, found that there were further falls on both lightside and heavyside.

A net balance of 97% of heavy side manufacturers found that sales in the final quarter of 2008 were lower than during the previous quarter. Lightside manufacturers were also found to be significantly worse off with 87% of them finding that their sales fell during the final quarter of 2008.

The lack of available credit has meant that workloads in the private construction sectors has fallen sharply. Over 45% of firms reported that housing, industrial and commercial output had fallen compared to a year earlier.

With 50% of public housing accounted for by the private sector, work within public housing has also fallen and repair and maintenance continues to suffer due to financing and job insecurity.

Noble Francis, the CPA economics director said: “The Association’s anticipates that the construction sector as a whole will fall 9% during 2009, the sharpest fall in almost 30 years, with the private sector enduring the worst falls. Although product manufacturers experienced a very difficult 2008, declining demand combined both with rising energy costs and materials prices will continue to present an enormous challenge to the industry. Our survey suggests that the environment for product manufacturers is continuing to deteriorate and this is being felt by both light side and heavy side manufacturers.

“Product manufacturers have reported that employment fell in the past three months but expect a further fall in the year ahead. 86% of heavy side manufacturers are reporting that employment levels had fallen, the fifth consecutive quarter during which employment fell. For the year ahead, 73% of heavy side manufacturers, expect employment will fall further.

“Just 18 months ago, the main concern was whether the industry would have the capacity to produce the anticipated projects. However, this has dissipated and the main concern now is under utilisation of capacity both for contractors and manufacturers. In the last three months, only 32% of contractors, reported that they were operating at 90% capacity or greater, 18 months ago, this figure was 80%.”

About Fiona Russell-Horne

Group Managing Editor across the BMJ portfolio.

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