2007 Off to a Blinder, Says CPA

The UK construction industry has enjoyed a firm start to the year, with growth expected to gather momentum over the coming months according to the latest joint Trade Survey Report from the Construction Products Association (CPA) and the Construction Confederation.

Overall, construction output continued to expand during the first three months of the year. The expansion in output follows a positive 2006 and confirms industry forecasts of an acceleration in construction growth over the course of 2007.

Building contractors’ output during the first quarter was ahead of a year ago, with growth driven by increases in both social and private new housing activity together with a strong commercial sector. Encouragingly, civil engineering contractors also report a continuing strong upwards trend in workload, although transport infrastructure activity, in particular motorways and trunk road projects, remains weak.

Construction product manufacturers have enjoyed an overall rise in sales volumes, with light side product sales especially buoyant. The performance of heavy side firms was more mixed, with the slow delivery of transport infrastructure projects dampening sales.

Looking ahead, construction products manufacturers anticipate buoyant market conditions over the next twelve months. On the back of increased enquiries for new work, building contractors also expect a further rise in their output. Similarly, civil engineering contractors anticipate the upward trend in orders and workload to continue. Industry growth is expected to gather momentum during the course of 2007, benefiting from stronger private sector investment and a pick-up in government funded work. However, housing and non-housing repair, maintenance and improvement work is expected to remain muted.

Commenting on the latest survey, Máren Baldauf, Economist at the CPA said: “The increase in construction products sales during the first quarter was primarily driven by light side manufacturers, while the performance of heavy side firms was far more mixed. Encouragingly, the upturn in construction activity is expected to continue over the course of the year. Whilst products manufacturers continue to report widespread costs increases, the impact of higher energy costs appears to be stabilising, which should moderate the rise in material price inflation medium term”.

Stephen Ratcliffe, Chief Executive of the Construction Confederation said: “The overall trend is still very positive and the key to maintaining this sustained growth is consistency and continuity, particularly in public sector investment. While building and civil engineering contractors remain optimistic about future work, it is disappointing that transport infrastructure activity remains weak. Since the Transport Plan was effectively abandoned in 2004, there has been a lack of clarity on transport infrastructure investment and it is showing".

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