CPA's Simon Storer: no big change in sales in 2010.

Construction market still 'challenging'

Published:  09 February, 2010

UK: With falling orders and enquiries, the conditions for construction are likely to continue to deteriorate during 2010, according to the Construction Products Association.

The challenging environment for construction is exacerbated by continual rises in raw materials costs and fuel/energy costs. The latest forecasts from the Association highlight the precarious state of the following two years of sharp falls in private sector construction.

The CPA's construction trade survey stated that 78% of heavyside construction product manufacturers endured a fall in sales during the final quarter of 2009. In addition, 45% of building contractors endured a fall in output during 2009 with the falls occurs across all sectors and 77% of civils contractors also reported that workloads fell in 2009 Q4.

Around 89% of lightside product manufacturers reported that they anticipated sales to remain unchanged or not to change significantly in the first quarter of 2010.

Some 75% of heavyside product manufacturing firms anticipate that sales will remain unchanged or not change significantly during the first quarter of 2010.

Expectations are considerably worse on the building contracting side, especially in the industrial and commercial sectors. Around 91% of building contractors reported that order books during the fourth quarter of 2009, pointing towards workloads in 2010, fell in the industrial sector. This is a record low for the Construction Trade Survey.

Around 71% of building contractors also stated that order books for the commercial sector had fallen. Civil engineering contractors' order books also give reason for pessimism within construction.

Some 64% of civil engineering contractors stated that orders fell during the fourth quarter of 2009, the seventh consecutive quarter of declining orders and this contrasts sharply with the same quarter two years earlier when 43% of firms stated that orders actually rose.

Civil engineering, which is more capital intensive, benefits relatively little from lower labour costs and suffers more from the rises in materials and fuel/energy costs. As a consequence, 20% of civil engineering firms stated that costs had risen, double the figure that was reported just six months earlier.

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