Construction industry sees further decline

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.

Key findings of the survey 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 £2.7 bn 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.

Recent data from the ONS has 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.

Julia Evans, chief executive of the National Federation of Builders said: “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.”