House building shows strong growth year on year

The house building market has outperformed the wider market in recent months, according to new figures.

Research from the Office for National Statistics (ONS) revealed that private housing output rose 0.5% in November, reaching its highest level since 2010. Compared with the previous year, output also rose by 12.5%.

Sales in the UK construction products manufacturing market continued to climb for a 15th consecutive quarter in Q4 of 2016, according to figures from the Construction Products Association (CPA).

The construction products manufacturing industry has an annual turnover of £55 billion and is made up heavy side and light side materials. Heavy-side materials include steel, bricks, timber and concrete, while light-side products include insulation, boilers, glass and lighting.

On an annual basis, 78% of heavy-side firms reported that sales had increased in Q4, while a quarter of light-side firms reported higher sales than a year earlier, the highest balance since Q3 2014.

However, as uncertainty intensifies both sides of the industry suggest lower confidence in rising sales in Q1, with only 6% of heavy-side firms and 29% of light side companies anticipating a rise in sales over the period.

Rebecca Larkin, CPA senior economist, said: “Construction product manufacturers ended 2016 on a strong note, with half of manufacturers on both the heavy and light side reporting an increase in sales in Q4, marking not only a 15th consecutive quarter of growth, but also the highest balances for the year.

“Unsurprisingly, manufacturers’ expectations for 2017 appear to have been tempered by the uncertainty surrounding the economic and political outlook. Heavy-side manufacturers appeared most exposed to the effects of sterling’s depreciation during the second half of 2016. In Q4, two-thirds of firms reported an increase in costs, the highest in five years, and a further 89% anticipate an increase over the next year. Rising costs of imported raw materials continue to be a primary driver of cost inflation, but there is now an indication that currency weakness is filtering through to higher energy and fuel costs too.

“The impact of Brexit on the construction industry is, as yet, unclear, but it is unlikely this year will be as buoyant as last unless government is able to provide greater certainty and the industry is able to manage cost pressures.”

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