Cost hikes will be a double whammy for firms hit by falling workloads according to the latest grim Construction Trade Survey.

Noble Francis, Economics Director at the Construction Products Association said: “The Construction Trade Survey for 2010 Q4 highlights sharp rises in costs such as the 46% price increase in copper and 80% in iron ore.

“With 70% of light side manufacturers and 56% of heavy side manufacturers experiencing a fall in sales in Q4 compared to a year ago along with 22% of building contractors also reporting a fall, there is great uncertainty regarding economic activity during the coming year.”

Julia Evans, Chief Executive of the National Federation of Builders added: “The combination of less work, rising material prices, lower margins, continued lending restrictions and a rise in VAT could not have come at a worse time.

“Companies can only battle these conditions for so long. With the rate of construction insolvencies exceeding that of other industries, the impact on our skills base will be devastating.”

Key survey findings are:

• Fewer than 10% of building contractors reported problems recruiting on-site labour in 2010 Q4
• 90% of light side firms and 53% of heavy side firms stated that employment fell in the fourth quarter of 2010
• Only 46% of building contractors reported that they were operating at between 90% and full capacity in 2010 Q4
• 47% of light side manufacturers and 61% of heavy side manufacturers reported that rising raw materials costs had led to a rise in manufacturing costs in the fourth quarter of 2010
• Only 4% of specialist contractors reported being paid within 30 days but 3% of specialists paid in over 90 days during 2010 Q4
• 81% of light side manufacturers reported a rise in investment in product improvement and 64% reported a rise in investment in plant and equipment in the fourth quarter of 2010