Construction outlook stablises

Construction product sales remained flat during the first quarter of 2010 compared to how much they fell one year earlier, according to the latest Construction Activity Barometer from Ernst and Young and the Construction Products Association.

Even more positively, product manufacturers are anticipating growth in sales in the second quarter of 2010.

This quarter’s overall result of 51 indicates that conditions for product manufacturers have generally stabilised, as anything below 50 indicates things still getting worse.

However, heavyside manufacturers saw a further decline in sales with a balance of 48, although this is the sector’s most positive result in over two years. Lightside manufacturers saw a significant rise in sales with a balance of 57, up from 25 compared to the last quarter, the first positive result since the first half of 2008.

Looking forward, both heavyside and lightside manufacturers expect to see a rise in sales during the next quarter with respective balances of 56 and 59.

Noble Francis, economics director for the Construction Products Association said; ‘This latest survey reflects improved conditions for the construction products industry and can be partly attributed to the fiscal stimulus from government during the recession.

“Looking forward, the rest of 2010 and 2011 are likely to remain extremely challenging for the industry given the threat of sharp cuts in public capital spending. Although there is a clear need to reduce the public deficit, government must ensure that it maintains investment in those areas such as transport, energy, housing and education which are most likely to encourage economic recovery and provide the basis for long term sustainable growth.’

Dominic McAra, a Director in the Ernst & Young’s Construction Products team said that one challenge to the sector will be how it will be able to generate environmental improvements to its products and processes.