Firms are upbeat about future work levels but rising material costs are forcing up manufacturers' prices, survey reports
Government investment in school buildings, health facilities and social housing, is helping to offset a slowdown in infrastructure spending and private building work, a survey has found.
Sustained government spending in schools, housing and hospitals helped boost construction activity in the first quarter of 2005, reported the Construction Industry Trade Survey published by the Construction Confederation and Construction Products Association.
Around 50% of product manufacturers surveyed identified increased investment in the built environment as a priority for the next government.
CPA chief executive Michael Ankers said: “While the industry anticipates a strengthening in construction growth over the next 12 months, the survey results underline the importance of public sector investment for both the construction industry and the wider economy.
Some 48% of contractors on balance reported higher volumes than a year ago while overall product manufacturers reported a modest rise in sales volumes.
Construction Confederation chief executive Stephen Ratcliffe said: “Contractors are upbeat for the workload levels over the next 12 months, but firms are experiencing increased pressure on margins from rising costs and a deceleration in tender price inflations.”
Ratcliffie said that contractors were primarily concerned with regulatory and tax burdens faced by UK firms, although they noted there had been a modest easing in labour costs.
The survey found that a lack of road investment activity held back heavy side manufactures’ sales volumes, with on balance firms reporting no change in first quarter sales compared to a year ago.
Civil engineering reported a modest improvement thanks to more site preparatory work for building projects.
Overall on balance 66% of contractors and 59% of manufacturers expected to increase their output over the coming 12 months.
All manufacturers reported a substantial increases in raw material and energy costs, with 80% of manufacturers reporting that their unit costs had risen by over 5% during the last year. Over half of manufacturers reported increasing selling prices by over 5%.