RMI growth to offset weak sales
Published: 17 August, 2009
LONDON: Strong performance in the repair, maintenance and improvement markets will help offset weak demand in the other sectors of the building industry.
Allan Durning, analyst writing for Gerson Lehrman Group, said: "Despite the recent comments about recovery and 'green shoots' the evidence would still indicate that we have some distance to travel before the building material industry returns to the levels of volumes enjoyed in the period circa 2004-2007 pre the market crash.
"Strong performance in the RMI and infrastructure markets will help offset weak demand in the other sectors."
Construction output will continue and current data indicates that 2009 will fall by a record 16% followed by another drop in 2010 of 5% before levelling, he said.
Although some commentators claim the industry has bottomed, Mr Durning said evidence from contractors' forward order books shows demand has fallen significantly and will not pick up in the short term with confidence low and funding hard to obtain.
"We are looking at a period of three years before building material volumes rise to the 2004 level, price and gross margins will remain under pressure until 2013," said Mr Durning.