The cash spent on imported building materials plunged in the final quarter of 2008 despite the huge drop in the value Sterling providing a clear indicator of the rapid decline in construction activity.

In cash terms the value of imports in the fourth quarter of 2008 dropped 13% compared with the previous quarter and was down 9% on a year earlier.

Imports Exports.GIF

Given that the effective purchasing power of Sterling dropped by about a quarter between the final quarters of 2007 and 2008, the drop in materials volumes imported is likely to be far greater than the cash figures suggest.

Against this however there has been a fall in commodity prices which would have reduced the inflation in imported materials resulting from the adverse changes in the exchange rate.

But taken on mass the figures clearly all point towards a rapid slowdown in work on construction sites around Britain.

Equally worrying for the wider construction industry is that exports have failed to respond to the benefits of the exchange rate. Imports in cash terms were up in the final quarter by a shade more than 1%.

Exports had been on a broadly upward path up to the final quarter, but it would appear that the slowdown in the global construction industry is shrinking markets abroad despite the competitive advantage of falling prices of UK goods to foreign buyers.

The detailed numbers reveal the sweep of the slowdown across sectors of the construction industry. Both imports and exports of fitted kitchens are down 20% on the previous quarter and 30% on a year earlier. This is consistent with the slowdown in house building.

Looking at products in the commercial sector we see imports of lifts down 40% on the quarter and 25% on the year. Imports of air conditioning equipment, a relatively late cycle product in commercial construction, point to a nasty turn in the market. While imports were up almost 40% comparing 2008 quarter four with 2007 quarter four, when we compare the final quarter with three months earlier there are signs of a rapid decline.

It would be silly to try to read too much detail into the figures, but as an indicator of the state of construction they provide strong clues. And these clues are that the slowdown is rapidly spreading to most areas of construction.