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[January 2008]
Tougher Times Ahead in UK Construction Products Market Predicted
The continuing financial turmoil is casting a lengthening shadow over future UK construction products industry prospects and although industry growth remained firm during the fourth quarter of 2007, manufacturers anticipate weaker growth ahead – according to the Ernst and Young/Construction Products Association Activity Barometer.
The final quarter of 2007 recorded a score of 69, the lowest for 2007 as the housing slowdown began to impact for both light and heavy sides. However this score was still firmly above the 50 ‘no change’ mark.
Commenting on the results, 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 next 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. The increase in heavy side confidence on the face of it seems surprising, but reflects perhaps a more even year.
Tougher times appear to be ahead after Christmas however. 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."
www.constructionproducts.org.uk
ENDS