Housing slump hits product manufacturers

Product manufacturers have emerged as the latest victims of the housebuilding slump, recording a dramatic fall in sales in the second quarter of 2008.

The latest Industry Barometer, compiled by Ernst and Young and the Construction Products Association, has recorded its lowest score since it was launched more than two years ago.

The barometer reading for the second quarter is almost half the figure recorded during the same quarter a year ago.

Manufacturers of heavy side products (such as bricks and blocks) have experienced the sharpest slowdown, with a score barely half that of the previous quarter, and their estimate of sales for the next quarter is predicted to be even lower.

The light side manufactures are less gloomy as spending in this sector is currently considerably higher, although the expectations are that sales will decline as the economic slowdown impacts upon the labour market and consumer spending.

Dr Noble Francis, economics director for the Construction Products Association, said: “The current economic slowdown is now beginning to impact across the industry. Difficult loan conditions both for companies and individuals have led to a 25% fall in housing starts in the private sector from just a year ago.

"However there are still some bright spots in the industry. Infrastructure spending is still doing well as is the Building Schools for the Future programme. What is important is that the government continues to deliver its capital spending plans as promised. If the government cuts back on this, then the concern across the industry will be much more widely spread.”