Materials supply disruption eases, says CLC
1 August 2022
First the good news for construction and related industries: the Construction Leadership Council reports that supply chain difficulties are continuing to ease for buyers of building materials.
John Newcomb, CEO of the Builders Merchants Federation and Peter Caplehorn, CEO of the Construction Products Association, co-chairs of the Construction Leadership Council’s Product Availability working group, say that with one or two exceptions, general product availability continues to improve across all categories and all regions, with the exception of Northern Ireland where separate issues are affecting the transport of goods.
They say that very high levels of inflation exacerbated by the Ukraine conflict have stabilised. Softening demand, particularly at the retail end of the market, has led price inflation to moderate for some products, although this is unlikely to result in lower project costs in the short term.
“The general view is that inflation will persist at a lower level across most product categories for the rest of the year,” they add.
They also point out that, while many UK manufacturers purchase energy on forward contracts to help manage risk, the current extreme price volatility means that some firms are experiencing electricity cost fluctuating by up to 300 per cent on a day-to-day basis, which may affect the financial viability of some energy-intensive manufacturing during the winter months.
“Recent weeks have seen improvements in the supply of aircrete blocks and bricks, in part due to a slight fall in demand. Summer maintenance programmes, however, may temporarily reduce production and reverse this trend as there remains a fine line between supply and shortfall due to continued strong sales of new houses,” they say.
Electrical wholesalers report increased demand for solar PV and other renewable energy products, but also extended delivery times for these products.
The not-so-good news is that the CLC also points out that inflationary pressures are affecting SME builders working primarily in private housing repair, maintenance and improvement. As consumers tighten their belts they become less willing to enter contracts without a firm commitment to the end price.
With some economic analysts suggesting that inflation will peak later this year, hopefully such delays in work will prove to be postponements rather than cancellations.
