Tougher times ahead for construction industry

The final quarter of 2007 records a score of 69, the lowest for 2007, as the housing slowdown begins to impact for both light and heavy sides. However, this score is still firmly above the 50 no change mark.

Máren Baldauf, economist for the Construction Products Association said: “The Barometer findings indicate that although there is plenty of activity across the industry the prospects looking forward are giving some cause for concern. Both heavy and light side firms now anticipate that the sharper than expected downturn in the housing market will constrain sales growth this year.

“Significantly, heavy side firms for the first time this year are more optimistic than light side firms because of the expected recovery in infrastructure activity, mainly due to a recovery in water companies’ investment and rail improvement programmes.

Dominic McAra, a director in Ernst & Young’s building products team said: "The fall in light side confidence in the current quarter reflects a trend that we are seeing of companies having a much tougher second half of the year as people tighten their belts, often after a buoyant first half.” He added: “We consider that tight supply chain and cash management will be crucial over the next few months in what is likely to be a tougher environment than for the last few years."