Terrorist attacks cloud manufacturers’ prospects

"CONSTRUCTION product manufacturers who have seen their business activities disrupted in the wake of September’s terrorist attacks in the US are concerned that general business and consumer confidence may deteriorate further over the coming months, according to the Construction Products Association’s third-quarter trade survey."

"Improved third-quarter sales volumes have failed to lift industry expectations amid fears that the flow of new private sector projects will weaken further as developers adopt a 'wait and see’ attitude following the attacks. Manufacturers anticipate that sales volumes will slip back during the fourth quarter, with the heavy side of the industry particularly wary. Moreover, the industry is increasingly cautious about the prospects for the next 12 months."

"In the light of these findings, the CPA has welcomed moves by the Bank of England to bolster confidence by recent cuts in interest rates. However, the survey also supports the Association’s belief that further rate cuts may be required over the coming months, especially if consumer confidence stumbles."

"Commenting on the findings, Allan Wilén, the CPA’s economics director, said: ‘The economic uncertainty arising from recent tragic events underlines the importance of government-sponsored work in sustaining construction growth over the medium term. Initial reactions, however, are that the additional funds promised under the current Comprehensive Spending Review have been slow to translate into new orders and work on site."

‘The Government now needs to work with local authorities and the other public sector bodies responsible for delivering its plans to remove any administrative bottlenecks and ensure that investment is delivered to schedule.’

"Meanwhile, in a letter to the Chancellor, delivered in advance of last month’s pre-Budget statement, CPA president Roy Harrison called on the Government to maintain its plans for increased investment in the country’s infrastructure, but to avoid further tax increases to fund them."

"‘Industry has suffered disproportionately from regulatory and fiscal burdens imposed by the Labour Government in the last Parliament,’ he said. ‘Should the economy weaken, the Chancellor must resist calls to increase taxation and fund his spending commitments through an increase in government borrowing.’"