Construction industry survey indicates more growth in 2008

The construction industry ended 2007 on a positive note, with modest growth set to continue during 2008 — according to the latest trade survey report from the Construction Products Association and the Construction Confederation. Although both product manufacturers and contractors reported that the growth in activity slowed during the final quarter of last year, output and sales volume remained solidly up compared to the same period a year earlier. Contractors reported a further rise in output during the fourth quarter of 2007. The pace of growth weakened markedly during the quarter compared to the previous three months, yet still produced a record year-on-year rise in output growth. The dip in output combined with weaker new orders and enquiries suggest that higher interest rates and the tougher credit conditions are affecting the sentiment of consumers and investors, dampening the flow of new work in private sectors. The past tightening of the labour market, which pushed up labour costs significantly, appears to have been eased by slower industry growth during the fourth quarter. Building contractors’ capacity utilisation remains at high levels, but pressures are easing. Two-thirds of contractors stated that they were operating at 90% of capacity or higher, slightly lower than in the previous quarter. Stephen Ratcliffe, chief executive of the Construction Confederation says, ‘Despite the slowing in the rate of growth, there is a strong indication that the sector is still fairly robust. Contractors retain a healthy amount of optimism, and we have to make sure that we don’t talk ourselves into a recession when the evidence shows the industry remains busy and buoyant.’