Nothing reveals what is going on in the construction industry quite as clear as the pattern of sales of building products.
In 2023, so far, activities such as internal fit-out, refurbishment and maintenance have continued to do well but new-build project starts have struggled to get out of the ground. This is reflected in the Construction Products Association (CPA) latest state of trade survey, for the first quarter (Q1) of 2023 Q1.
For a third consecutive quarter a fall in sales for heavy side producers contrasted with an 11th consecutive quarter of growth for manufacturers on the light side. The performance of heavy product sales – bricks, concrete, aggregate etc – is also partly down to the rain seen in January and March, the CPA economists suggest.
In 2023 Q1, a balance of 7% of heavy side manufacturers reported that sales of construction products decreased. For light side manufacturers a balance of 44% reported that product sales rose, extending a run of growth that began in 2020 Q3.
Forward-looking sales expectations improved but the strength of demand in construction remains the key concern for sales over the next 12 months.
Both heavy and light side manufacturers anticipate an increase in sales over the next 12 months, although with consumer-focused sectors of construction expected to bear the brunt of an economic slowdown, activity is likely to be concentrated in infrastructure, energy efficiency retrofit and commercial refurbishments.
CPA head of construction research Rebecca Larkin said: “Heavy side manufacturers recorded another quarter of falling sales as the slowing economy and high construction cost inflation continued to lead to reticence over new project starts. Heavy rain and bad weather in both January and March will also have slowed down the external and structural works that heavy side products flow into. By contrast, interior and fit-out work that focuses more on light side products was able to continue largely unhindered and demand remains strong in any case, underpinned by large offices and commercial refurbishment projects.
“In terms of the economy, there was greater stability in Q1 following the post-mini budget turmoil at the end of 2022, which has improved manufacturers’ views for the 12 months ahead. The split in fortunes across construction is likely to continue, however, with housing and other consumer-focused sectors set for a struggle against a backdrop of falling real incomes and interest rate rises, whereas larger-scale refurbishment activity continues to be driven by energy efficiency considerations and new models of hybrid home-office working.”