Better news for construction

5 April 2023

Good news for the construction industry and related sectors. The latest statement from the Construction Leadership Council’s (CLC) Product Availability working group paints “a fairly upbeat picture”, helped by a better than expected forecast from the Office of Budget Responsibility with the UK predicted to avoid recession, and inflation predicted to fall from ten per cent to three per cent over the course of the year.

John Newcomb, CEO of the Builders Merchants Federation and Peter Caplehorn, CEO of the Construction Products Association, co-chairs of the CLC Product Availability working group, also say that construction activity in the first quarter has been higher than predicted in Q4 2022.  

“While housebuilders do not anticipate 2023 sales will reach 2022 levels, consumer confidence is holding, aided by an easing of interest rates for five-year fixed rate mortgages, and new build reservations and sales have improved against Q4 2022,” they add.

UK brick-makers have made significant investments in increased production, with the first new line coming on stream later this year adding over 185 million more bricks a year. However, the electro-technical sector continues to experience delays in the delivery of solar PV equipment and LED lighting which remain affected by the supply of semi-conductors.

Timber prices have now returned to around pre-Covid levels, and the report states that there have been reductions for structural steel and rebar during the first quarter of 2023.

However, price inflation remains the major issue. “While prices are not rising as quickly as they have been, they are still substantially higher than 18 months ago and profit margins are being squeezed,” states the report. “This is particularly concerning for SME builders and regional house-builders.” 

There are still uncertainties ahead. The unexpected cut in oil production announced last weekend by Saudi Arabia, Iraq and several Gulf states led to a spike in prices that could have knock-on inflationary effects; however, the more positive immediate outlook regarding construction materials availability is certainly good news. 

Photo: Mikael Blomkvist