Rising raw materials costs hit building sector

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 2021 Q1.

According to the latest industry survey from the Construction Products Association (CPA), the building sector is being hit by the rising cost of raw materials and a growing skills crisis which has seen the demand for Carpenters and Plasterers reach a nine-year high. The CPA trade survey for Q4 2020 shows that an increase in sales, output and workloads were all reported during the final quarter of the year, but builders across the UK are bracing themselves for further cost pressures after reporting a hike in material prices.

The survey showed that overall costs increased by 18% for main contractors, 23% for heavy side manufacturers and 25% for both civil engineering contractors and light side manufacturers.

Brian Berry, Chief Executive of the Federation of Master Builders said:

Rising material prices and growing skills shortages dampened growth among construction SMEs in the final three months of last year. The optimism that we saw from small construction firms during most of 2021 has now dropped off because of growing concerns about rising costs. The pledge from the Government that it will focus on finding ways to boost smaller scale house builders is therefore timely as it’s an area that is ripe for growth and could help counteract the risk of stagnation within the SME part of the construction industry.”

Nick Cook the designer of ProntoCALC.com observes:-

It is clear that central government would like the construction industry to increase its output. Historically construction had been 1/6th of the Gross Domestic Product (GDP) and with the demand for housing not being met, the national output could lift if only the builders could get going. Labour shortages and the usual planning barriers continue to hold back the economy. Each local planning authority continue with their `No` default position on Housing, and with no real-time promotion of construction apprenticeships nothing will change quickly. Only central government have the overview to observe and change these intrinsic defects, Brexit however has and continues to hold its focus.”

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