Overall UK construction activity contracted for the 7th consecutive quarter in 2010 Q1

This is according to the latest Construction Trade Survey published today, while industry experts have expressed concern that political uncertainty could prolong the recession in the industry.

Key results in the survey showed that enquiries remain subdued and order books depressed, and with pressure on raw materials prices continuing to strengthen, the industry expects operating conditions to deteriorate further as 2010 progresses.

“It is going to take some time to come to terms with the way the new government will work and how stable the relationships that are being established are,” said Michael Ankers (right), chief executive of the Construction Products Association.

“This uncertainty could delay the investment decisions in both the public and private sectors, and prolong the construction recession beyond 2010.

“Manufacturers and suppliers need confidence that the recovery in the housing market will continue and clarity about public sector spending programmes going forward. Without this, future investment decisions by companies in the industry will inevitably be put on hold.”

Key survey findings are:

• 78% of light side manufacturers reported an increase in sales in 2010 Q1 compared to 2009 Q1, but sales volumes were down for 75% of heavy side manufacturers

• Sentiment about the future, whilst still negative, has improved since the last survey. 40% of light side manufacturers and 38% of heavy side manufacturers expect sales to rise quarter-on-quarter in 2010 Q2

• Inflationary pressures persist. 80% of light side and 37% of heavy side manufacturers reported a rise in unit costs in 2010 Q1, with raw materials and fuel/energy costs being the main drivers. Employment levels and wages, however, continued to fall

• Sterling’s persistent weakness has increased UK manufacturers’ competitiveness overseas and 72% of light side and 20% of heavy side reported further increases in exports in 2010 Q1

• Building contractors saw particularly sharp falls in the industrial and commercial sectors and the prospects going forward in these areas are also disappointing, with new orders in 2009 falling by 38% and 45% respectively

• Contractors also saw a continued fall in enquiries during Q1, although the fall in commercial orders (42%) was smaller than the 75% experienced in the final quarter of 2009

• Despite the falling workloads, more contractors reporting increasing costs and they attributed this to rising material prices.