The construction industry continues to go from strength to strength with output increasing again during the second quarter of 2007, according to the latest joint Trade Survey Report from the Construction Products Association and the Construction Confederation.

Overall, there has been a continued acceleration of industry growth during 2007. The rise in activity has boosted construction products sales and volumes, with heavy sided firms in particular reporting a marked turnaround in their fortunes. Encouragingly despite the rise in output, concerns over capacity constraints appear to be easing, while contractors report fewer difficulties in recruiting skilled labour.

Building contractors report a marked rise in industry activity during the second quarter, both compared to the first quarter and 2006. Strong activity in the commercial and public new housing sectors is again the principal driver of industry growth, with larger building firms the main beneficiaries of the increase in workload.

-- Advertisement --

Commenting on the survey, Máren Baldauf, Economist at the Construction Products Association, said: “The increase in construction product sales during the second quarter was again driven by light side manufacturers, with 94% of firms reporting higher sales volumes compared to this time last year.

“Half of light side manufacturers and a third of heavy side manufacturers reported an increase in sales of more than 5% in the last year. However, construction product manufacturers continue to face a widespread rise in unit costs – mainly driven by a fuel& energy costs – as well as higher raw material prices.

“These cost pressures have further squeezed manufacturers’ margins and continue to filter through to building contractors as higher material costs.”

Looking ahead, industry optimism is strong despite expectations of more modest construction growth next year. Five interest rate hikes are anticipated to slow consumer driven construction sectors, such as private new housing and repair and maintenance activity, as well as increasing caution among real estate investors.

Against this background, contractor’s report that order books and enquiries for both housing and non-housing repair and maintenance activity slipped back during second quarter, while enquiries for private new housing works stagnated.

(JM/SP)