The construction
industry experienced a mixed quarter for products sales, output and new orders
in the opening three months of 2019, according to a quarterly survey of the
supply chain’s product manufacturers, contractors, civil engineers and SME
builders by the Construction Products Association.
The Construction
Products Association’s Construction
Trade Survey for 2019 Q1 shows that during the quarter, sales of
construction products rose according to 54% of heavy side manufacturers and 29%
of light side manufacturers.
In contrast, 20% of
main contractors reported a decrease in output during the quarter, whilst
workloads were reported lower for 17% of civil engineering contractors and 7%
of SME builders.
Only product
manufacturers and SME builders reported positive readings in forward-looking
indicators, with a broad-based fall in new orders reported by main contractors
and civil engineers.
Commenting on the
survey, Rebecca Larkin, Senior Economist at the CPA, said: “The year opened
with a mixed quarter of performance for construction. Confidence among
consumers and businesses remains low and this has reduced the amount of work
coming through to the two largest construction sectors, private housing and
commercial, which require greater visibility over the economy’s future growth
path to see projects get the go-ahead.
"By itself this
raises concern over the extent to which the political stalemate over Brexit is
affecting UK construction, but the risks are intensified when combined with the
prevailing narrative of rising costs for labour, raw materials and fuel eroding
contractors’ margins.”
Richard Beresford,
Chief Executive of the National Federation of Builders, said: “Member reporting
indicates bad news for the sector as material costs keep increasing while
contractors’ order books continue to decrease. While companies can take steps
to prepare their business for exit from the EU, the pace of progress by the
Government continues to affect confidence and highlights the need for greater
certainty."
Commenting, Director
of External Affairs for the Civil Engineering Contractors Association (CECA),
Marie-Claude Hemming, said: “We are concerned that the industry is experiencing
a decline in output at a time when the Government should be taking steps to
shore up the economy. A decline in growth will have ramifications for
businesses and communities who rely on our members to deliver the world-class
infrastructure the UK needs.”
Key survey findings
include:
- Sales of construction
products rose in annual terms according to 54% of heavy side manufacturers
and 29% of light side in Q1
- On balance, 20% of main
building contractors reported that construction output fell in the first
quarter of 2019 compared with a year ago
- 17% of civil engineers, on
balance, reported a decrease in workloads during Q1
- On balance, 7% of SME
contractors reported a decrease in workloads in Q1 compared to three
months earlier
- Main contractors reported
that order books were lower or unchanged in all sectors in Q1
- 15% of civil engineering
firms reported a decrease in new orders in Q1, on balance
- 16% of SMEs reported an
increase in enquiries in Q1, on balance
- Overall costs increased for
91% of civil engineering contractors, whilst 60% of main contractors, 85%
of heavy side product manufacturers and 82% of light side manufacturers
reported a rise in raw materials costs
- Profit margins fell for half
of main contractors during the quarter.
