Housebuilding downturn rocks products manufacturers

A sharp fall in sales for the second quarter of 2008 has left products manufacturers feeling much gloomier than they were a year ago, as they start to suffer the fall out from a depressed housing market.

The latest Industry Barometer of the sector, compiled by Ernst and Young and the Construction Products Association (CPA), registered its lowest fall since it was launched more than two years ago.

The barometer hit a low of 41, down from almost double that figure in the same quarter a year ago. A score of 50 on the barometer indicates "no change" in the sector.

The CPA said that manufacturers of bricks and blocks bore the brunt of the slowdown, with a score of just 25 - just a third of the score two quarters ago.

Light side manufacturers were less gloomy but they too are expected to feel the pinch evenutally as the slowdown hits the labour market and consumer spending.

CPA economics director Francis Noble said: "The current economic slowdown is now beginning to impact across the industry.  Difficult loan conditions both for companies and individuals have led to a 25% fall in housing starts in the private sector from just a year ago. 

"However there are still some bright spots in the industry.  Infrastructure spending is still doing well as is the Building Schools for the Future programme.  What is important is that the government continues to deliver its capital spending plans as promised.  If the government cuts back on this, then the concern across the industry will be much more widely spread.”