CLC Discusses Construction Product Availability

Statement from 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.

Further to last month’s statement, once again there is good availability of most building materials across the UK, with the exception of rock mineral insulation, which is now on allocation, but is expected to normalise soon with increased production capacity.

While there are also some reports that plasterboard and roof tiles are on allocation, these appear to be either localised issues or restricted to a limited number of manufacturers, so do not seem to be creating significant problems in any sector.  In addition, no major availability issues have been cited around either electrical components or timber, which in previous months were proving problematic.

At a macro level, construction output has risen by 2.7% since the start of the year despite adverse weather and various other factors such as strike action.  The main area of growth over the past quarter has come from the repair and maintenance sector, but the commercial and civil engineering sectors have seen improvements as well. The associated retail trade has started to pick up with the return of  warmer weather.

In the infrastructure sector there have been few reports of material shortages, but materials inflation still plays a major part in increasing project costs. The end of the Help to Buy scheme and continued uncertainty over interest rates, and its impact on mortgage availability, is constraining housebuilding.  The consensus for sector forecasts is that year on year demand will be down this year before picking up in in 2024. More broadly and with a general election looming in 2024, positive stimulus by government in any of these sectors may boost fortunes for the industry.

Overall, ONS figures show that materials prices rose 8.4% in the first four months of the year, with inflation levels slowing to 4.7% in April.  Looking ahead, however, although many larger manufacturers of energy intensive products have begun hedging their energy contracts into 2024, the costs of those products will likely remain elevated compared to the levels seen before the outbreak of war in Ukraine.

We are also monitoring the impact of drought conditions – including higher prices and delays to deliveries – affecting key logistic routes and shipping volumes from Asia and China and through the Panama Canal – though no firm data is yet available.

We are also aware that, with the availability and cost of financing options increasingly limited, commercial behaviour is likely to harden putting pressure on lower tiers and SME companies reducing cash-flow capacity and making liquidity a greater challenge.  With the number of administrations in the construction sector at a very high level, this is another area we will continue to monitor.

Due to summer holidays, the Product Availability Group will meet next in September.  There will be no reports published in July or August.

Source : Construction Leadership Council

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