The Construction Products Association’s autumn report states that construction output is forecast to fall by 6.8%. The two largest construction sectors contributing to this fall is private new housing and private house repair, maintenance and improvement (RMI).
Next year, the forecast is for a further drop of 0.3% in construction output. The reasons given for this is the UK’s slower economic growth and high interest rates. A recovery in private housing, new build and RMI is not due until 2025.
Meanwhile, the Council for Aluminium in Building (CAB)’s Q3 State of Trade Survey demonstrates that aluminium fenestration seems to have remained reasonably buoyant during 2023. CAB members report remaining busy, and positive about future demand.
Historic sales volumes have dipped for members of CAB, for the first time in the last 12 months. The annual drop in historic sales for members is just -5% on net balance but nevertheless indicates a crucial drop in demand.
Expected sales volumes reported by members decreased significantly from a high of 77% on net balance in Q1 2023 to -6% on net balance forecast for the last quarter in 2023. It is important to note that the membership still sees the full year ahead as bringing positive growth: 39% indicate sales growth into 2024. This is favourable against the slight drop in forecasted sales from the construction supply chain of just -6%.
Just over a third (37%) of CAB members reported no change in sales volumes between Q2 and Q3; 47% stated a drop in sales and only 16% report growth between the two quarters. The year-on-year sales figures are a little more polarised: 11% of members stated no change, 48% stated a drop and 43% reported growth between the two years.
Turning to likely constraints on activity over the next 12 months, 89% of respondents claimed that demand is the likely constraint on businesses moving forward. Reported labour costs remain, over twice that of the wider construction supply chain, reinforcing the lack of an experienced labour pool.
Members’ capital investment has reduced in the year ahead compared to the previous year. The customer research category was the only one that showed an increase in spend for the year ahead.
Phil Slinger
