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Soaring prices trigger recession talk

Soaring steel and cement prices are fuelling fears of a construction downturn, economists warned this week.

Continuing surges in steel prices along with high fuel prices will see contractors. submitting higher tender prices. Orders will fall as a result, they warned.

"The evidence we are getting would support that," said Civil Engineering Contractors Association (CECA) economic advisor Jim Turner. He warned that CECA's forthcoming April survey would report declining prospects for its members.

"Our January survey already showed the biggest ever rise in material costs year on year," said Turner. "It's not a good time because clients are not going to be very tolerant of higher tender prices and that is likely to lead to a lower volume of work."

A Construction Products Association (CPA) survey of steel manufacturers found nearly 70% reporting reduced margins because of rising iron ore and energy costs. This would lead to further price increases that would be passed on by contractors, said CPA economics director Noble Francis.

"The construction industry this year and next year will not grow at the same rate as before and there will be a slow down in orders."

Site preparation and the commercial building and private housing sector are expected to be particularly hard hit by the rise in material prices, he added.

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