Uncertainty surrounded the start of 2023 in the finishes and interiors sector with concerns (particularly in the housing sector) resulting in 32% of respondents seeing a reduction in workloads. Whilst there remain underlying concerns related to ongoing inflation and a rising cost of capital impacting viability and delaying starts, 37% did experience increases and confidence has built through the quarter.
Commenting on the release, FIS CEO Iain McIlwee said:
“The data here was timely as we met wiith Bank of England representatives this week along with a small delgation of construction organisatons led by BuildUK. The overall situation remains that things are more positive for most than many had anticipated. There remain some clear risks and uncertainty that will mean growth overall in the economy is likely to remain subdued and this will have an impact on construction. Interest rates will be key, with inflation reports this week slightly higher than anticipated and consequently the 5.0% peak anticipated rates is already being talked up and we have seen a reaction from certain high street banks increasing mortage rates. The cost of mortgages and finance for large commercial projects will remain a key risk.
The election will also have a distorting effect, with Autumn 2024 a probable date. How policy adapts to drive home ownership and construction and encourages investment from business will again be key. The long term need to get building homes and hospitals as well as redeveloping commercial space to meet modern requirements and sustainable goals is all positive, but how policy drives this may be limited by political motivations.
Resiliance in the supply chain too remains a concern with higher levels of insolvency in construction driven by aggressive procurement and cash/credit issues that are being cascaded through the supply chain and leaving SMEs vulnerable. The full impact of the Building Safety Act and legacy are still to be fully understood.”
Read the full state of FIS State of Trade Survey Here – FIS State of Trade Survey Q1 2023
See Also – CPA survey reveals a cautious improvement in Q1
After the uncertainty-filled end to 2022, conditions have become more settled in Q1 with product manufacturers’ sales and contractors’ workloads indicating an improvement in conditions for construction.