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.
NOTE TO EDITORS:
- The Construction Products Association represents the UK’s manufacturers and distributors of construction products and materials. The sector directly provides jobs for 337,000 people across 23,818 companies and has an annual turnover of more than £60.2 billion. The Association is the leading voice to promote and campaign for this vital UK industry. The CPA produces a range of economic reports including the quarterly Construction Industry Forecasts, Construction Trade Surveys and the State of Trade Surveys. Much of the CPA's work is focused on serving as the first point of contact for politicians and policy makers requiring advice and information about matters that affect construction products or the wider construction industry. This includes understanding the need for investment into manufacturing or the built environment, new housing and energy-saving retrofitting of the existing housing stock; helping to develop effective, UK and EU legislation, regulations and product standards; and promoting the role of manufacturers in delivering a resource efficient built environment.
- Build UK provides a strong collective voice for the contracting supply chain in construction. Build UK brings together 27 of the industry’s largest main contractors and 40 leading trade associations representing over 11,500 specialist contractors. Build UK was created as a result of a merger between the National Specialist Contractors’ Council (NSCC) and UK Contractors Group (UKCG) in 2015.
- The Civil Engineering Contractors Association (CECA) has over 300 member firms that carry more than 80% of all civil engineering work in Great Britain. The CECA survey of civil engineering workload trends, in which more than a third of the membership takes part, tests for changes over the past year in contractors’ workload, workforce, order books, cost trends, and tender prices. It also examines the supply situation for key resources, and contractors’ expectations of trends in new orders and employment in the coming 12 months.
- The Federation of Master Builders (FMB) is the largest trade association in the UK construction industry representing thousands of firms in England, Scotland, Wales and Northern Ireland. Established in 1941 to protect the interests of small and medium-sized (SME) construction firms, the FMB is independent and non-profit making, lobbying for members’ interests at both the national and local level. Within its membership, around 45% of FMB members build new homes either as their primary function or as part of the suite of building services they provide, but most are primarily active in the domestic RM&I market. The FMB is committed to raising quality in the construction industry and offers a free service to consumers called ‘Find a Builder’.
- The National Federation of Builders (NFB) represents around 1,500 builders and contractors across England and Wales. In addition to providing specialist advice and business services, the federation, with a network of four regional offices, lobbies local, national and European government on a range of issues to sustain positive trading conditions for members. With origins dating back to 1876, today's NFB is a modern organisation providing the medium sized contractor and smaller builder with an unparalleled package of services.
FOR FURTHER INFORMATION CONTACT:
Rebecca Larkin, CPA Senior Economist
Tel: 020 7323 3770
Matt McKeown, CPA Communications Executive
Tel: 020 7323 3770