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NEWS Construction industry reports mixed Q1 A


ccording to the Construction Products Association’s


C onstruction Trade Survey


for the first quarter of the year, SME builders, civil engineering firms, product manufacturers and specialist contractors all reported a strong start to 2017 with increases in sales, o utput and workloads in Q1 driven by i ncreased demand.


The CPA’s Q1 survey also painted a positive picture for 2017, with companies reporting an optimistic outlook for the year ahead.


Meanwhile, weak activity in the i ndustrial and commercial sectors resulted in main building contractors experiencing a decrease in activity, with 31% reporting that construction output fell in the first quarter of 2017 c ompared with a year ago.


I n addition, Q1 order books were r eported to be lower across the majority of sectors for both main


contractors and civil engineering contractors. The latest statistics a lso highlighted that the past


d epreciations of Sterling continue to e xert upward pressure on input costs a cross the industry.


An increase in overall costs was reported by 84% of civil engineering contractors, whilst 86% of main contractors, 93% of heavy side


manufacturers and 93% of light side m anufacturers also reported a rise in raw materials costs.


Senior economist at the CPA, Rebecca Larkin, said: “Q1 was a positive opener to 2017 for product m anufacturers, specialist building c ontractors and SME builders,


c ontinuing the momentum built up over the last four years of growth. “For main contractors, however, it was only private sector house building that provided the bright spots of activity during the quarter.


Falling orders in the commercial and i ndustrial sectors also spilled over into infrastructure in Q1 and signal a broader weakness ahead.


“Furthermore, in contrast to the continued rise in costs reported during the quarter, particularly for imported raw materials, building c ontractors’ tender prices are moving in the opposite direction. This suggests that it is margins, rather than clients, that are bearing the b runt of cost inflation.”


Meanwhile, Suzannah Nichol, chief e xecutive of Build UK said: “Despite mixed rates of output growth in the first quarter of 2017, it is good news that enquiries for future work grew strongly with confidence in t he project pipeline for 2017. But i ncreased costs are beginning to b ite. The majority of the supply chain reported increased costs in Q1, especially for materials. If this level of


price increase continues, current and future projects could start to feel the squeeze.”


T he survey found that 31% of main b uilding contractors, on balance, reported that construction output fell in the first quarter of 2017 compared with a year ago.


A ll specialist contractors reported a r ise in output during Q1. On balance, 2 1% of SME contractors reported i ncreased workloads in Q1 compared to three months earlier, while main contractors reported lower orders in all sectors except private housing. O n balance, 40% of SMEs and 50% o f specialist contractors reported an i ncrease in enquiries in Q1. Overall costs increased for 84% of civil


engineers contractors, whilst 86% of main contractors, 93% of heavy side manufacturers and 93% of light side manufacturers reported raw materials costs rose in Q1.


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