Mixed results for construction sector in Q1

Construction product manufacturers and specialist building contractors reported mixed fortunes in the first quarter of 2017.

The latest Construction Products Association survey indicated that 65% of heavy-side manufacturers – which includes steel, bricks, timber and concrete – saw an increase in sales compared with a year earlier.

On the light-side, in products such as glass and lighting, sales rose for 38% of manufacturers.

Building activity also increased in Q1, with higher output reported by all specialist contractors, accompanied by 21% of SME builders and 8% of civil engineering contractors.

However, 31% of main contractors reported a decline in building activity, led by falls in the industrial, commercial and repair and maintenance sectors.

The near-term outlook also has similarly mixed views, with enquires to specialist contractors and SME builders increasing in Q1, and net balances rising to a four-year high of 50% and 40% respectively.

Almost two-thirds (62%) of heavy-side manufacturers and 53% of light-side manufacturers anticipate an increase in construction product sales over the next 12 months.

However, order books were also reported to be lower in all sectors except private housing, marking the first negative balance in four years.

Cost inflation continued to rise in Q1 driven by the weaker pound, which resulted in higher costs for imported materials and products.

Among manufacturers, 73% of heavy-side and 80% of light-side firms reported an increase in costs compared with a year ago.

For raw materials, 93% of product manufacturers saw costs increase, as well as 86% of main contractors.

More than two-thirds (69%) of heavy-side firms also reported a rise in fuel and energy costs, which reflects the lagged effect of rising global oil prices on top of the weakened pound during 2016.

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