Manufacturing drops to lowest level since 1983

Orders for the manufacture of construction materials have fallen to their lowest level since 1983, according to research by the Construction Products Association and accountants Ernst & Young.

The figures follow the loss of at least 9,000 construction industry jobs in the last three months, according to the CPA. Its activity barometer fell to eight, from 13 at the end of last year. The barometer rates activity in the last quarter compared to the same quarter in the previous year on a scale from 1-100, with a score below 50 indicating a fall in output.

It said: “Effectively, almost all manufacturers have experienced falling sales in the last quarter.” In addition virtually all manufacturers said they expected output to fall further in the next quarter, with the barometer again recording eight out of 100.

The figures showed that manufacturers of “heavy side” materials such as structural steel or concrete, used early in the construction process, were the hardest hit. However, “light side” manufacturers, who produce internal fixtures and fittings, were now predicting the situation will get equally bad for them in the next quarter.

Dominic McAra, a director in Ernst & Young's Construction Products team, said the last quarter had been “particularly tough” for construction products companies. He said: “The recession, coupled with the coldest winter for several years, has adversely impacted sales and cash flows. The next six to nine months is likely to see companies aiming to ensure that they keep within their banking covenants. This will almost certainly result in further restructuring in the sector.”