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Recession deepening for contractors

Research from the Civil Engineers Contractors Association (CECA) has shown the recession to be deepening, with tender prices falling off a cliff, opening the door to a ‘double-dip’ recession.

While the April survey showed workloads deteriorating, but at a slower pace, the figures for July showed a renewed plunge.

This is the fifth successive quarter of contraction, and could indicate a double-dip recession, where the cycle of recession to recovery is hit by further weakness in the economy.

Forward order books have been in decline for more than a year, and 70% of the sample recorded lower order books than a year ago. 

Tender prices began to decline in January this year for both new and repair and maintenance work. This trend has since become established and the July survey shows accelerating downward pressure on tender prices for both types of work.

CECA National Director Rosemary Beales said:  “Contractors are maintaining a positive outlook despite the extremely gloomy news that there is significantly less work of any kind available at the moment.

“This reduction in work is forcing tender prices down – a factor that will have long term ramifications for both the health of the civil engineering contracting market and for clients.

“This survey confirms the widespread feeling that economic recovery is still a long way off. It is imperative that contractors and clients maintain a serious dialogue about sustaining the long term health of the industry, which is as much in the interests of those who want value for their investment in the nation’s infrastructure as it is in the interests of the contractors who construct and maintain it,” she said.

  • Wales saw a sharp deterioration in workloads in the current survey,
  • A weakening trend was also evident in England, but less pronounced,
  • In Scotland the downward trend slowed slightly.

All four of the survey size groups again reported shrinking workloads but in this survey, 100% of the mid scale companies (300–599 employees) reported lower workload compared with July 2008.  The other size groups returned balances ranging from –23% to –66%.

Civils workloads have also declined. The railways sector - the only sector to show a positive balance since 2008 has now moved into negative territory for the first time.

Preliminary works, which is a bellweather for much of the industry and where decline appeared to be slowing in April, is once again returning sharply negative figures for available work.

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