Construction decline continues

Construction market activity fell again during the second quarter of 2009 according to the latest Construction Trade Survey from the Construction Products Association.

The sharpest annual contraction on record was seen in the first quarter and, although the decline has slowed slightly, subdued economic activity, tight credit conditions and increasing unemployment provide continue to make for “an extremely challenging environment for construction and product manufacturing”, the survey said.

The survey found that two-thirds of building contractors reported falling output in the commercial sector with 55% reporting the same thing in the private new housing and industrial sectors. 26% of building contractors reported new housing output had fallen over the past year despite the £2.7 billion allocated by government to stimulate the housing market.

57% of civils contractors reported a fall in workloads during quarter two compared to 47% in the previous quarter.

On the manufacturing side, all heavy side manufacturers found that sales fell significantly as did 78% of light side product manufacturers, compared with a year earlier. This contrasts sharply with two years ago when 82% of light side product manufacturers saw an increase in sales compared with a year earlier.

Noble Francis, economics director at the Construction Products Association said: “The sharp fall in output within private sector construction has been exacerbated by falls in output from the public sector. This is extremely worrying given the large number of government announcements and fiscal stimuli, there has been recently.

“Central government stated it would be bringing forward £3 billion from 2010/11 to stimulate work in construction and the budget in April 2009 provided further stimuli for education, by assisting the Building Colleges for the Future programme, in addition to £600 million for housing.

“Unfortunately any benefit from these proposals has yet to find its way to significant additional work for the industry. As a consequence it is critical the government ensures these recent announcements are translated into construction activity on the ground as soon as possible.”