Construction decline expected to continue throughout 2010

Published:  09 August, 2010

UK: Despite the recent favourable ONS figures, the construction industry is facing a further decline in output in the second half of 2010, according to the the latest Construction Trade Survey, published today.

This follows last year’s sharpest fall in 35 years. 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. With public sector cuts looming, the outlook for the industry over the coming months is bleak.

Although product manufacturers experienced a rise in sales in 2010 Q2 the forward picture is very uncertain. Both lightside and heavyside manufacturers are seeing a mixed picture, with 61% of heavyside manufacturers anticipating no change or a fall in sales in the second half of the year, exemplifying the uncertainty surrounding the recovery in the housing market and the speed and extent to which public sector cuts will impact upon construction.

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. The industrial sector suffered the sharpest fall in workloads during 2009, with a 34% fall in just one year and this latest survey highlights that the situation in the industrial sector continues to deteriorate. 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.

Key survey findings are:

  • 50% of contractors stated that workloads fell on education and health in 2010 Q2.
  • 57% of contractors reported falling orders in the industrial sector during Q2.
  • 47% of light side manufacturers reported rising raw materials costs in 2010 Q2.
  • 45% of heavy side manufacturers reported that fuel/energy costs rose.
  • 53% of contractors reported that tender prices fell during the second quarter of 2010.
  • 56% of contractors reported a fall in margins in 2010 Q2.

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