UK construction industry continues to decline

The UK construction industry continued to decline during the final quarter of 2009 despite the wider economy returning to growth, according to the latest Construction Trade Survey published today.

Furthermore, with rising material costs and increasing fuel and energy prices, coupled with decreasing orders and enquiries, the environment for construction throughout 2010 is likely to deteriorate even further, delaying any recovery in the sector for at least another twelve months.

With heavy side manufacturing sales providing an early indicator of how construction will perform near term, it is even more worrying that 78 per cent of heavy side manufacturers endured a ninth consecutive quarter of falling output and 75 per cent of heavy side manufacturers anticipate that sales will not grow significantly during the next quarter.

Noble Francis, economics director at the Construction Products Association commented: "The continuing decline in workloads across the construction industry is of great concern, especially given that the situation has been exacerbated by rising energy and raw materials costs. This, combined with falling tender prices, is placing increasing pressure upon an industry that has now been in decline for two years. The Chancellor’s confirmation in December 2009 that public spending on construction will fall by more than 50 per cent during the next four years only provides more concern for the industry following last year’s sharpest fall in construction on record and risks delaying any potential recovery in 2011."

Stephen Ratcliffe, director UKCG, said: "These survey results confirm that the industry continues to face tough trading conditions, which could get worse before they get better. The amount of public spending on construction following the election is going to be crucial in saving jobs in the industry."