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CPA: Construction expands despite housing slowdown

Construction activity enjoyed its sixth consecutive rise in the third quarter of 2014, despite a slowdown in private housing.The Construction Products Association (CPA) has released its latest Construction Trade Survey, which reveals growth was reported by 60 per cent of contractors, on balance, in Q3.This trend was witnessed in firms across the sector, from from small and medium-sized enterprises to the largest contractors.There was a slowing in the expansion of private housing activity, with only 35 per cent of firms, on balance, reporting an increase in activity, compared with 57 per cent in Q1 and 41 per cent in Q2.However, this was offset by gains in other sectors, as 43 per cent of firms reported growth in private commercial, which covers offices and retail work, and a further 41 per cent noted an expansion in the private industrial sector, which covers factories and warehouses construction. Dr Noble Francis, economics director at the CPA, said activity is set to rise in 2015, as companies reported increases in forward-looking indicators such as orders and enquiries."A rise in Q3 order books in private housing was reported by 15 per cent of contractors, on balance. A further 13 per cent and 12 per cent of firms reported rises, on balance, in order books across private industrial and public non-housing (education and health) respectively," he added.Mr Francis said the only negative news was that margins were hit hard, with firms suffering cost rises in Q3, while the benefits of tender price rises are only likely to be felt when work on the contracts begins in 2015.Some 68 per cent of companies reported labour costs rose and 74 per cent said materials costs increased in Q3 compared with the previous quarter.Stephen Ratcliffe, director of UK Contractors Group, described the latest figures as "encouraging". "They are in line with Office for National Statistics data and paint a better picture than earlier this year," he added. 

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