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Gloomy reports forecast slow recovery for sector

The Mechanical and Electrical Contractors Market and Electrical Wholesale Market reports, both published by AMA Research, show decline from 2008 with little sign of improvement in the immediate future.

The M&E market has declined by 17 per cent to £14.9 billion over the past three years, says AMA, after experiencing strong growth between 2005 to 2008.

As the economic downturn made itself felt in 2009, the market was sustained by the transport and leisure sectors, with the Olympics, health and education sectors providing opportunities.

However, increased competition, fewer projects and weak demand has resulted in continued decline and further pressure on profit margins.

A bright spot has been the rise of energy-efficient installations, buoyed by the drive to cut carbon emissions and reduce energy bills.

Further decline is predicted in 2012, followed by improvement in 2013 as the private commercial construction sectors recover.

By the end of 2015, the M&E sector could reach a value of £15.6bn, still well below the 2008 high of around £18bn.

The electrical wholesale market declined by 15 per cent to a value of just under £3 billion last year, according to AMA.

While some sectors, including housing, are expected to improve this year and next, improvements will be slow to materialise due to factors such as low levels of construction, a poor exchange rate, increased price competition and longer product life-spans.

Wholesalers are expected to retain their dominance in the traditionally strong areas of electrical accessories and test equipment.