17-08-2007
Construction industry output gathering strength
According to a Trade Survey Report from the Construction Products Association and the Construction confederation, the construction industry has increased output again in the second quarter of 2007, up on the same period in 2006.
Building contractors have reported strong activity ion the commercial and public new housing sectors, which is fuelling industry growth, although it is the larger firms who are seeing most of the benefit.
Máren Baldauf, Economist at the Construction Products Association, said: The increase in construction product sales during the second quarter was again driven by light side manufacturers, with 94% of firms reporting higher sales volumes compared to this time last year. Half of light side manufacturers and a third of heavy side manufacturers reported an increase in sales of more than 5% in the last year.
“However, construction product manufacturers continue to face a widespread rise in unit costs – mainly driven by a fuel & energy costs – as well as higher raw material prices. These cost pressures have further squeezed manufacturers’ margins and continue to filter through to building contractors as higher material costs”.
Despite predictions of a slower construction growth in 2008, optimism generally prevails in the industry. If the interest rate hikes continue, consumer driven construction sectors that rely on private new housing and repair & maintenance activity, may feel the pinch, added to by an increasing amount of caution among real estate investors.
However, the construction products industry is overwhelmingly positive about output growth during the third quarter and the year ahead.
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