The construction industry has experienced further decline
across all sectors during the second quarter of 2009, according to the latest
Construction Trade Survey, with building contractors, civils contractors,
product manufacturers and specialist contractors all reporting further falls in
activity.
The results for Q2 follow the sharpest annual contraction on
record, experienced in Q1 and although the decline has slowed slightly, it is
not seen as a precursor to growth in the near term, as subdued economic activity,
tight credit conditions and increasing unemployment provide an extremely
challenging environment for construction and product manufacturing.
Recent data from the ONS have shown that there has been
another fall in economic activity in Q2 in the UK of 0.8% and this is reflected
in construction, where declining current demand, orders, employment profits and
prices are presenting severe challenges to the industry.
Speaking about the survey, 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 £3bn 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 £600m 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.”
Commenting on the survey Stephen Ratcliffe, director UKCG,
said: “The Q2 survey paints a gloomy picture. Especially concerning is the fall
in public sector construction, which provides clear evidence that the
government stimuli announced in the budget and pre-budget reports have so far
failed to have an impact on the market. While companies are reporting increased
enquiries this may not lead to increased business. We have seen a significant
increase in tender lists in the public sector over recent months.”
Julia Evans, chief executive of the National Federation of
Builders added: “The outlook certainly looks bleak across all sectors. Not only
is it becoming increasingly difficult to win work, but profit margins are being
squeezed for those companies that do manage to land contracts. We are doing our
best to support companies during the downturn and to help them fight back, but
clearly it is going to be a long haul.”
Key survey findings are:
- 66% of building contractors reported that output in the
commercial sector fell in the second quarter of 2009 and 55% reported that
output fell in the private new housing and industrial sectors.
- 26% of building contractors reported new housing output
had fallen over the past year despite £2.7bn allocated by government to
stimulate the housing market.
- 57% of civils contractors reported a fall in workloads
during 2009 Q2 compared to 47% in the previous quarter.
- 66% of building contractors reported that tender prices
fell in the second quarter of 2009 and 63% reported that profit margins fell.
