Rising costs may affect growth

Firms across the construction industry are bracing themselves for further cost pressures after reporting a rise in raw material prices despite growth across the industry during the fourth quarter of 2016, reports the Construction Products Association (CPA). 

 

An increase in sales, output and workloads were all reported during the quarter but forward-looking indicators suggest the outlook for building activity during 2017 has worsened. The Construction Products Association’s Construction Trade Survey Q4 showed that overall costs increased for 88% of civil engineering contractors, whilst 75% of main contractors, 78% of heavy side manufacturers and 88% of light side manufacturers also reported a rise in raw materials costs.

 

The latest statistics also highlighted a skills shortage affecting key on-site trades with main contractors reporting shortages of carpenters and plasterers at their highest in nine years.

 

Commenting on the survey, Rebecca Larkin, Senior Economist at the CPA, said: 'The construction industry closed 2016 on a strong note, with activity improving for firms throughout the supply chain. However, order books and enquiries were lower for contractors and signal a weaker outlook for 2017.

 

'Cost pressures continued to rise, particularly for imported raw materials, and compound the risks that activity will be unable to grow at current rates over the next 12 months. The construction products manufacturing industry is responsible for directly employing 280,000 people and whilst government has a role to play in providing certainty for projects, industry will need to find ways to navigate rising costs.'