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For the first time in many months we have some good news for the construction industry with the Construction Products Barometer from Ernst and Young and the Construction Products Association reporting that the decline in overall building product sales stabilised in the first quarter of 2010 and construction output increased in March for the first time in 25 months. This good news was supported by the Chartered Institute of Purchasing and Supply’s monthly survey of contractors and construction purchasers.
Do not get too excited as this only shows that the decline has come to an end. There is a marked difference between heavy side manufacturers who experienced a continuing decline, due to the bad weather in January, and light side manufacturers who saw a significant rise in sales. Both sectors expect a rise in sales during the next quarter, although this is tempered with an expectation of public sector spending cuts. A slowdown is already in progress as the government has implemented a freeze on public bodies making any new spending decisions or signing contracts on previously committed funding until after the general election. This will affect Partnership for Schools and the Homes & Communities Agency.
Supporting the news of growth, property consultancy Knight Frank reported strong demand for Central London office space in Quarter 1 which was more than double that of the same quarter last year.
But don’t get too excited as the ECA report that electrical contractors have reported a fall in workload for the seventh quarter in succession. The overall figures disguise a lot of variations with smaller contractors generally faring better than the larger companies. Although still declining, the fall in the level of enquiries is slowing.
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Chris Ashworth, founder of Competitive Advantage Consultancy, provides strategic marketing, research and training services to the construction industry. He is a member of the organising committee for the Chartered Institute of Marketing Construction Industry Group (CIMCIG). |