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Construction sales optimism ‘unsustainable’

The current flurry of cautious optimism about the construction industry output is unsustainable in the long run, according to the Construction Products Association.

Construction sales optimism 'unsustainable'

Compared with last year, sales of construction products continued to rise during the third quarter of 2010 according to the latest Construction Activity Barometer from Ernst and Young and the Construction Products Association.

Unfortunately, the Association believes that the buoyancy of the past six months is relative to the depressed state of the industry during 2009 when private sector demand contracted at an unprecedented rate.

This quarter’s reading of 74 still suggests a healthy increase compared with last year. In the Barometer a figure of 50 means no change in sales compared to a year earlier with below 50 representing a fall in sales.

Noble Francis, CPA economics director said: “Sales of both heavy side products and light side products were strong relative to 2009 Q3. The heavy side sales index stood at 79 for the second consecutive quarter and a significant 71% of respondents reported that their sales rose.

“Expectations about the future, however, were more subdued, particularly on the heavy side. Light side respondents, however, continue to be optimistic about their sales over the short term and the light side expected sales index stood at 63, its highest level since the first quarter of 2008, for the second consecutive month.

“Respondents, however, did warn that recovery is unlikely to be sustained beyond 2010 and expressed concern about the pending Comprehensive Spending Review on 20 October.”

About Fiona Russell-Horne

Group Managing Editor across the BMJ portfolio.

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