New orders for construction work fell again, with a drop of 8% in Q4 and 28% from the previous year. In line with this, the price of new construction work fell by 2.0% in Q4 2008 compared with the previous quarter and the same quarter a year earlier, with a fall of a further 8.0% predicted by BCIS over the course of the year. 

Costs are still going against the current falling inflation trend with an annual rise of 7.7% for materials and 4.8% far wage rates, placing further pressure on struggling firms.

A sharp decline of 12% in new work output is expected during 2009 with a more moderate fall of 2% expected in 2010 with growth returning to the industry in 2011. It is those operating in the private sector, particularly in housing, commercial and industrial that will suffer the most.

Steve Gillingham, North West RICS construction spokesperson and director of Sense Cost Consultancy said:

"Whilst there is much debate about the potential length and depth of the recession and the consequent effects on construction orders, the reality is that we are in for a long period of under-supply of work which has already led to competitive pressures having a significant downward pressure on tenders.

“Survival has now become the main focus for many companies in the North West, where the temptation to buy work in order to secure cash flow is increasing. For clients however, there is a real danger that contractors will strive to recoup additional costs and improve their margins during the build programme."