CPA’s latest Construction Trade Survey found that building contractors, civil contractors, product manufacturers and specialist contractors all reported further falls in activity during the second quarter, following the sharpest annual contraction on record in the first quarter.
CPA said that despite the severity of the decline improving slightly quarter-on-quarter, “it is not seen as a precursor to growth in the near-term”. “Subdued economic activity, tight credit conditions and increasing unemployment provide an extremely challenging environment for construction and product manufacturing,” CPA said.
Results from the survey showed two-thirds of building contractors reported output in the commercial sector fell in the second quarter, while just over half said output in the private new housing and industrial sectors fell. Two-thirds of building contractors polled also said tender prices fell in the second quarter, and 63% reported profit margins were down.
Just over a quarter of building contractors reported new housing output has fallen over the past year, despite GBP2.7bn allocated by the government to stimulate the housing market.
“The sharp fall in output within private sector construction has been exacerbated by falls in output from the public sector,” said Noble Francis, economics director at the CPA. “This is extremely worrying given the large number of government announcements and fiscal stimuli there has been recently.
“Central government stated that it would be bringing forward GBP3bn from 2010/11 to stimulate work in construction and the budget in April provided further stimuli for education, by assisting the Building Colleges for the Future programme, in addition to GBP600m 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.”