CPA 'gloomy' after fall in public sector output

The rate at which the construction industry is contracting slowed in the second quarter of the year, according to the latest figures from the Construction Products Association, but falls in public sector output signal a “gloomy” time ahead.

The Construction Trade Survey paints a pessimistic picture for contractors, manufacturers and specialists, who all reported further falls in activity over the three-month period, the body said.

The declining pace of the contraction was not seen as a precursor to growth in the near term and public sector construction was not at high enough levels to offset falling private workloads, it added.

It said falling tender prices and new orders continued to put pressure on the industry. Two thirds of building contractors reported falls in tender prices, while 63% reported a fall in profit margins.

Meanwhile, 57% of civils contractors reported a fall in workloads in the second quarter of the year – up from 47% in the previous quarter.

Noble Francis, economics director at the CPA, said government stimulus plans had not yet produced significant extra work for the industry and called on the government to push ahead with proposals. He said: “It is critical the government ensures these recent announcements are translated into construction activity on the ground as soon as possible.”

Stephen Ratcliffe, director of the UK Contractors Group, added: “The second quarter survey paints a gloomy picture. Especially concerning is the fall in public sector construction, which provides clear evidence that the government stimuli announced in the budget and pre-budget reports have so far failed to have an impact on the market.”