CPA Economic and Construction Update

CPA Economic and Construction Update

The CPA’s Economic and Construction Update provides an insightful summary of the latest economic and construction trends in the UK. The update covers key indicators such as the CPI inflation and core CPI inflation, UK construction average weekly earnings, UK construction insolvencies, UK house price index, and the UK residential market survey.

The latest weekly update includes

  • ONS Construction Output (February 2024)
  • ONS UK Construction Materials Price Indices (February 2024)
  • DBT UK Brick Deliveries (February 2024)
  • RICS UK Residential Market Survey (March 2024)

The update is an excellent resource for anyone interested in the UK construction industry, and the contents page allows readers to easily navigate to the sections that are most relevant to their interests.

In addition to this update, the CPA also publishes Construction Forecasts twice a year. Members can download both the pdf and excel versions of the forecast from the FIS website here. The CPA’s next (Spring) forecasts will be published on Monday 29 April.

Construction output rose by 1.1% in volume in January 2024

Construction output rose by 1.1% in volume in January 2024

Monthly Construction Update for January

  • Construction output is projected to have declined by 0.9% in the three months leading up to January 2024, primarily due to a drop in new work by 4.5%, while repair and maintenance saw an increase of 4.0%.
  • The decline in the three-month period was driven by reductions in infrastructure new work and private housing new work, which decreased by 9.3% and 5.2% respectively. Conversely, non-housing repair and maintenance, and private housing repair and maintenance saw positive growth of 3.2% and 3.3%.
  • January 2024 witnessed a 1.1% rise in monthly construction output in volume terms, following three consecutive monthly declines, with a recorded value of £15,422 million for January 2024.
  • The monthly output increase stemmed from growth in both new work (1.1%) and repair and maintenance (1.2%).
  • Across sectors, six out of nine sectors experienced an upturn in January 2024. The primary contributors to this monthly rise were private new housing and non-housing repair and maintenance, showing increases of 2.6% and 1.9% respectively.

Read the full report here.

Download the ONS Construction update here.

Product Platform Rulebook Update

Product Platform Rulebook Update

Delivered as part of the Government’s Transforming Construction programme, the Product Platform Rulebook is a shining example of what can be achieved when government and industry come together to drive change. The Rulebook remains one of the Construction Innovation Hub’s most influential outputs and forms a key enabler for the Infrastructure and Projects Authority’s (IPA) Transforming Infrastructure Performance (TIP) agenda. Given such potential, it is critical that government and industry find ways to continue this impact now that the Hub’s initial funded period has now concluded.

In this spirit, we are delighted to announce that the Construction Leadership Council will be taking over the reins of the Product Platform Rulebook in 2024 thanks to our new Industrialised Construction workstream. This work will see the Rulebook revised and re-released in the form of a new ‘Platform Playbook’, setting out a clear path to the adoption of platform approaches for social infrastructure delivery. The group is chaired by Ron Lang, former Chief Technical Officer of the Hub and now Regional Director at AtkinsRéalis.

“The Product Platform Rulebook and the concepts it contains present a logical path to a more industrialised, more productive construction sector. But this work is far from complete, and we continue to learn through our collective experiences of applying these concepts in practice. I am delighted to have the opportunity to lead the next step in its development through the CLC and thank my industry peers for continuing to commit their time and expertise for the collective benefit of our sector.”

The decision to pass the Rulebook over to the CLC for update has been warmly welcomed by leading figures within the former Construction Innovation Hub. The Hub’s Programme Director, Keith Waller, believes the Rulebook still has a powerful role to play going forwards:

“Yet another of the Hub’s output has found a new home to drive forward its legacy. Given that our analysis identified that the adoption of platform approaches in construction could unlock long term productivity gains of up to £7.8bn per annum, I am delighted the CLC will now be using its convening power to ensure these benefits can be achieved.”

Steven Yeomans, former Hub programme lead and now Chief Engineer for Construction at the Manufacturing Technology Centre believes the planned update shows what can be achieved through continuing collaboration:

“As the former lead partner of the Hub, we’ll continue to support this ongoing, transformative work through our participation in the CLC’s Industrialised Construction workstream. In doing so, we can enable the construction sector to address performance and productivity challenges.”

The new Platform playbook is expected to be published for comment in November with a series of supporting activities being planned for 2024. For more information, please contact

CPA Economic and Construction Update

CPA Construction Trade Survey – further weakness to end 2023

It was a weak end to 2023 and a subdued start to 2024 for firms operating throughout the construction supply chain, according to the CPA Q4 2023 Trade Survey.

Trade surveys for the fourth quarter of 2023 indicated that it was the worst quarterly performance since the first half of 2020, when activity was disrupted by lockdowns at the height of the pandemic, with declines in workloads for chartered surveyors and SME building contractors, and falls in sales for both heavy and light side product manufacturers.

There are still some areas of growth, however, and workloads growth reported by civil engineering contractors confirms that infrastructure continued to provide activity, a pocket of growth also identified by chartered surveyors, alongside public non-housing. Outside of these sectors, however, the constituent surveys point to little near-term pickup in the first half of 2024.

Falls in new enquiries were reported across SME contractors’ main sectors of focus of house building, commercial/industrial and RM&I, which mirrors the official ONS data on construction output, which has shown a notable decline since the second half of last year, and new orders, which have declined since the end of 2022. For product manufacturers, sales are expected to fall in 2024, whilst for chartered surveyors expectations of growing workloads were again restricted to infrastructure and public non-housing.

A stark downshift in the housing market, reluctance among homeowners to commit to large improvements spending and lower volumes of large commercial and industrial projects in the pipeline mean that demand is increasingly being flagged as a primary constraint or concern for activity over the coming 12 months, particularly when this combines with flatlining economic growth, a step-change to higher interest rates and financing costs, and continued uncertainty over input inflation as the Red Sea transport diversions continue.

Interaction between CIS and IR35

Interaction between CIS and IR35

If you’re a main contractor who is employing a sub-contractor through an intermediary, such as their own limited company, familiarity with the interaction between off-payroll rules (IR35), and the Construction Industry Scheme (CIS), is crucial, and so is an understanding of when the VAT reverse charge applies. This information sheet has been prepared by the JCT to help FIS members understand the interaction between CIS and IR35.
CPA Economic and Construction Update

Falling demand hits construction product manufacturers’ sales

The Construction Products Association’s latest State of Trade Survey for 2023 Q4 showed that manufacturers ended last year with a further fall in construction product sales on both the heavy side and light side – the sixth consecutive quarter of decline for heavy side manufacturers and the second fall for those on the light side. Manufacturers anticipate sales will decline over the next 12 months, citing a clear concern over the weak demand expected in 2024.

In 2023 Q4, a balance of 63% of heavy side manufacturers reported that sales of construction products decreased, marking the sixth consecutive quarter of decline and the weakest performance since 2020 Q2, at the height of the pandemic. Alongside this, 40% of light side manufacturers also reported a fall in product sales. This was the second quarterly decline but, equally, the lowest balance recorded since activity was paused during the early pandemic restrictions.

Looking to the next 12 months, demand was cited by 71% of heavy side manufacturers and 80% of light side manufacturers as the factor most likely to constrain growth during 2024. Consequently, 11% of heavy side manufacturers and 15% of light side manufacturers anticipated a fall in sales over this year.

The backdrop for costs was shown to be more favourable, however, with manufacturers reporting a continued easing in cost inflation. Price pressures were lower for raw materials, fuel and energy, which had all been major contributors to inflation over the last couple of years. Nevertheless, manufacturers reported continued upward pressure from wages & salaries.

Rebecca Larkin, CPA Head of Construction Research said: “Manufacturers had a challenging end to 2023 and there appears little to rally expectations for growth this year. Falls in new construction orders since the end of 2022 have now begun to filter through into lower construction activity, particularly in housing, commercial offices and warehouses and factories in the industrial sector. With flatlining GDP growth, a step-change in interest rates and build costs, and emerging risks around delays and cost rises related to the Red Sea shipping disruptions, it should come as no surprise that demand was flagged as the key concern for construction product manufacturing activity in 2024.”

Key survey findings include:

  • A balance of 63% of heavy side firms and 40% of light side firms reported that construction products sales fell in 2023 Q4 compared with Q3
  • This was the sixth straight quarter of decline for the heavy side and second for the light side
  • 11% of heavy side manufacturers and 15% of light side manufacturers anticipated a fall in sales over the next 12 months
  • 71% heavy side manufacturers and 80% of light side manufacturers cited ‘demand’ as the key concern for sales over the next 12 months
  • Cost balances continued to moderate but wages & salaries were the strongest cost pressures for both heavy side and light side manufacturers