Back     Latest news from Green Building Press    Subscribe to our newsletter

Construction Industry Keeps Head Above Water

Posted: 07/08/2006

Mainstream construction activity increased during the second quarter of 2006, according to the latest joint Trade Survey Report from the Construction Products Association and the Construction Confederation. However, profitability is compromised by continuing increases in fuel and energy costs, which are squeezing both product manufacturers’ and contractors’ margins and driving up tender prices.

The rise in output has been caused by an increase in Government funded projects, especially new public non-residential buildings, such as schools and hospitals, and in both housing and non-housing repair and maintenance work. The industry is hopeful that this state of affairs will continue into the third quarterof the year.

Construction product manufacturers have experienced an overall rise in sales with light side firms also reporting higher export volumes and prices during the second quarter as overseas markets. Light side firms are gernerally positive about out-put growth over the next twelve months and although heavy side firms are more cautious about their immediate trading prospects, they too expect sales volumes to improve over the coming year.

Meanwhile contractors report second quarter output was ahead of a year ago, with around 40% of firms reporting that output was up on a year earlier.

Overall construction product sales were flat during the second quarter, as strong sales by light side firms were offset by weaker activity on the heavy side of the industry. On balance 46% of light side firms report that sales volumes had increased on a year earlier. The experience of heavy side firms has been mixed. On balance 14% of those firms report that sales volumes had decreased compared to a year earlier. However within this, 17% had seen their sales rise by more the 5% and a third had experienced a drop in sales volumes of a similar magnitiude..

Speaking about the latest report, Allan Wilen, Economics Director for the Construction Products Association, said; ‘Council and housing associations are now pressing on with promised improvement programmes and this has led to major contractors benefiting from the upturn in R&M work. As well as this, civil engineering contactors are also reporting that they are experiencing the strongest rise in workload for nine years, so this is good news. Unfortunately higher fuel and energy prices are exerting increased pressures upon industry costs and more than 75% of product manufacturers have had to increase their unit costs during the past twelve months because of this.

The rise in manufacturers’ costs is squeezing margins and is feeding through to selling prices. As a result building contractors are now reporting that higher materials’ prices are increasing their cost base and pushing up tender prices’.

In contrast, contractors concerns over labour availability and costs have eased. The sourcing of many specific site trades has improved; in particular contractors reported a marked improvement in the availability of plasterers, painters & decorators and bricklayers. However, plumbing vacancies remain difficult to fill, with 61% of those surveyed describing recruitment as difficult or worse.

Green Building Press  
 

Back     Latest news from Green Building Press    Subscribe to our newsletter

1528