Mixed signs for construction activity

Mixed signs for construction activity

The latest information from Builders’ Conference shows that there were 441 contracts worth £7.5 billion awarded in September. Whilst the value was 60% higher than the previous month (£4.7 billion), it did include a £2.2 billion contract for the Colne Valley Viaduct which is part of HS2, underlining the importance of the Government’s investment in infrastructure. For the first time since December 2020, the public sector outperformed the private sector, recording 51% of the value. There were 165 housing projects worth £2.5 billion (33%) and 55 office projects with a total value of £561 million (8%).

The number of tender opportunities was 24% down on August and remained 53% below the monthly average for the past year.

Market Data

FIS has access to a wide range of market data from sources including the CPA, Barbour ABI and Builders' Conference. In addition, FIS produces a state of trade survey specifically for the finishes and interiors sector.

Get early access to the Construction Manufacturers’ Marketing Index

Get early access to the Construction Manufacturers’ Marketing Index

NBS & Glenigan are working on some brand new research to create the Construction Manufacturers’ Marketing Index – to find out how manufacturers are marketing their construction products.

These unique findings will provide an essential tool for the construction industry to see holistically how marketing is applied, how digitised the approach is and how manufacturers marketing strategy and activity compares. For those manufacturers that take part they will get early access to the survey results so they can use it for their 2022 marketing planning.

The survey covers the following key topics the survey covers:

  • Manufacturers approach to marketing
  • Manufacturers current activity
  • Marketing within construction
  • Manufacturers future marketing activity

To take part in the survey, and gain early access to the results, submit your response at www.thenbs.com/marketing-index-2021 Closing date: 24 octobber 2021

CPA and Barbour ABI collaborate to help identify hotspots and coldspots in regional construction

CPA and Barbour ABI collaborate to help identify hotspots and coldspots in regional construction

This new report, a collaboration between Barbour ABI and CPA, seeks to analyse construction contract awards at a high level of regional granularity, firstly to identify pockets of growth or contraction – hotspots and coldspots – in regional activity and secondly, to offer a forward-looking indication of growth by region and by sector.

The report identifies London remains the UK’s largest regional economy and construction gross value added (GVA) in 2019 (the latest available from the ONS) was £22.6 billion, accounting for 18.5% of the UK construction total. With a construction GVA of £19.4 billion, the South East accounts for a similar proportion of UK construction (15.7%).

Given the relative size of the London and South East economies, populations and concentration of the services-based industry, it is easy to think that the majority of construction work is taking place in these regions. By using ONS regional economic data, it becomes clear that despite its overall dominance, there were only three London sub-regions in the top ten largest local authority areas for construction activity in 2019: Camden and City of London, Harrow and Hillingdon, and Westminster. Similarly, two sub-regions in the South East feature in this ranking. However, it is Hertfordshire, in the East of England, that remains as the sub-region with the largest value of construction activity in 2019. The South West, Yorkshire and the Humber, and the East of England complete the top ten list, underscoring the fact that there are large areas of activity beyond the traditional engines of growth.

The full report can be downloaded by FIS Members here.


The latest information from Builders’ Conference shows that there were 454 contracts worth £4.7 billion awarded in August. Whilst this was lower than the previous month as the industry had its traditional and well‐deserved summer break, both the number and value of contracts awarded this August were higher than August 2020, indicating that construction’s recovery is holding steady. 41% of all the contracts awarded by value were housing (£1.9 billion), 16% were office projects (£754 million) and 9% were education projects (£407 million).
The number of tender opportunities was 22% down on July and remained 40% below the monthly average for the past year.

Sustained growth but material inflation and supply concerns soar

Sustained growth but material inflation and supply concerns soar

The latest CPA survey of the supply chain showed that the construction industry remained in expansion mode during the second quarter of 2021.

Construction product manufacturers reported the fourth consecutive quarterly rise in product sales, whilst SME building contractors and chartered surveyors saw workloads rise yet again in Q2. While growth in workloads remained broad-based across sectors, it was largely led by private housing and RM&I, where activity has been sustained by government housing policies and increased demand for larger properties with outdoor and office/study space in rural areas due to the homeworking trend. Infrastructure also remained a key driver due to works occurring on a number of large-scale projects and long-term regulatory frameworks, with civil engineering contractors reporting the third consecutive annual rise in workloads in Q2.

Forward-looking indicators point to further growth over the coming year, with the net balances for product sales and workload expectations, enquiries and orders all hitting multi-year highs in Q2. Despite this, the supply of materials and products remained the biggest issue for chartered surveyors and civil engineers and were viewed as the main risk to product manufacturers’ 12-month sales outlook due to ongoing global supply chain issues. Concerns with the recruitment of skilled labour were also echoed across the supply chain, most notably for carpenters and bricklayers relating to house building, as well as general on-site trades. Raw material costs also emerged as another potential constraint, but the proportion of civil engineers raising tender prices for both new work and R&M hit an all-time high, whilst chartered surveyors expect rising profit margins in the year ahead.

FIS members can access the full results of the Construction Trade Survey here.

Market Data

FIS has access to a wide range of market data from sources including the CPA, Barbour ABI and Builders’ Conference. In addition, FIIS produces a state of trade survey specifically for the finishes and interiors sector.

Construction Product Availability Statement

Construction Product Availability Statement

Construction Product Availability: 24 August 2021

Statement from John Newcomb, CEO of the Builders Merchants Federation and Peter Caplehorn, CEO of the Construction Products Association, co-chairs of the Construction Leadership Council’s Product Availability working group

Although the overall supply situation has not changed substantially, there has been a temporary easing this month, most probably due to a combination of the holiday period and some domestic customers delaying or cancelling projects due to higher costs or cost uncertainty.

Timber, cement, roofing products, bricks, blocks, insulation, steel and cable management systems remain the products in shortest supply, while global shortages of semi-conductors are a cause for concern in the lighting and appliance sectors. Although product and material price inflation has slowed, indications are that it will be 2022 before prices stabilise, with some manufacturers still to implement double digit price increases to recover current and future cost inflation.

Haulage, however, and the lack of availability of drivers, are now the major concerns affecting distribution with some suppliers asking builders merchants to collect their orders as they cannot get enough drivers to complete deliveries. Regional distribution is a particular issue, with some finding challenges arranging deliveries to Scotland and the South West of England.

The problem is not limited to our sector, and with similar haulage issues affecting a wider distribution network there is no short-term fix. The Department for Transport is engaging with the freight sector and hauliers to look at both interim and longer-term solutions, which require collaboration between government and the sector.

Container shipping continues to affect imports. Key ports in China are suffering reduced capacity due to Covid, but the backlog extends beyond China throughout distribution centres worldwide. This is forecast to continue through the peak Christmas season into early 2022. With capacity at a premium, container prices remain high; however, these rates are not sustainable in the long term and when demand signals change, we are likely to see prices reduce.

Looking forward, the group discussed the requirement for aggregates and other key products when HS2 demand is at its peak in 2022/23. Projected volumes are being shared with industry trade bodies, key suppliers and the CLC Product Availability Group to help provide greater clarity and confidence about the industry’s ability to deliver HS2 as well as all other projects. This is a particular concern for smaller builders, who have struggled to compete for supply during the current period of extraordinary demand.

Construction Product Availability Update 22 July 2021

Statement from John Newcomb, CEO of the Builders Merchants Federation and Peter Caplehorn, CEO of the Construction Products Association, co-chairs of the Construction Leadership Council’s Product Availability working group

The basic trends of the last six months remain, with global demand far in excess of supply leading to product shortages, rapid and sustained price inflation, long lead times and uncertainty regarding deliveries.  It is also clear that the global shipping industry is far from recovered from the disruption caused by the coronavirus pandemic, with congested shipping routes, container cancellations and higher costs still evident.

The products most affected are those used in housebuilding and domestic repair maintenance and improvement (RMI), including roofing products, timber, insulation, landscaping products, blocks, sealants/PVA, PIR Insulation, kitchen carcassing and products that use plastic, e.g. drainage, some windows and bagged cement.

Bagged cement is particularly hard hit due to ongoing unprecedented demand but both bagged and bulk cement are on allocation; there are regional variations to this with some areas affected more than others. All UK kilns are operating but it may be a while before stocks return to normal. With high demand continuing, extended delivery times are expected to remain until the end of the year.

The high level of housing starts has caused a bow wave of demand for plastic pipes for groundworks and drainage. Some manufacturers are currently on allocation, but the expectation is that supply issues will be resolved by the end of Q3.

Demand for wood and wood products remains very strong and timber supply will continue to tighten into Q3, following the Scandinavian holiday and maintenance season in July, continuing the upward pressure on prices.  There are some indications that the situation may start to improve after this as global demand is beginning to ease.

Within infrastructure and commercial construction, steel and aluminium are both experiencing significant supply disruption and price inflation.

There is also concern around the availability of steel cabling management systems which could continue into early 2022 and engineering services business are advised to plan ahead.

Overall, prices for products and materials have increased by a reported 10-15%, consistent with the Office of National Statistics figure for May of 10.2% overall with 12.8% for those most commonly used in RMI.  Specific products, especially timber, has seen increases of 20-50% for most products and over 100% for OSB and other sheet materials. For the first time we have had reports that some merchants are destocking certain products that are no longer economic.

Labour, or rather the lack of it, is a rising concern.  All regions report hauliers/HGV/LGV drivers are in short supply and very difficult to recruit, which is contributing to longer delivery times particularly away from major transport routes and urban areas.  We continue to support the Road Haulage Association in its discussions with the Department of Transport to address the shortage.  We are now receiving reports of other vacancies being hard to fill, from relatively unskilled roles, such as yard operatives, to experienced bricklayers.

These labour shortages are being exacerbated by the growing number of non-symptomatic drivers, tradespeople, merchant and manufacturing staff required to self-isolate after coming into contact with someone who tested positive for Covid-19. This will further stretch the supply chain.

Looking forward, housebuilders are managing current builds to completion but there are indications that smaller, regional developers may be forced to delay starting work on new sites until they have more certainty around product availability and lead times.

The demand for home improvement and RMI work remains strong but most work in this area is covered by JCT contracts which have no facility for any flexibility on material costs, leading to fears that we will see business failures arising from unsustainable contracts.  This is now being investigated and may require a change in contractual positions.

Alongside pricing, stability and accuracy of supply remains the overarching concern and regular, accurate and transparent communication throughout the supply chain to the end client is deemed vital by all.  It is important that all parties recognise the extent of the extraordinary challenges we are currently experiencing and adopt a flexible and collaborative approach to finding solutions.

Additional reports:

Steel Cabling Management Systems


Construction Product Availability Update 23 June 2021

Statement from John Newcomb, CEO of the Builders Merchants Federation and Peter Caplehorn, CEO of the Construction Products Association, co-chairs of the Construction Leadership Council’s Product Availability working group

The overall product availability picture has not changed this month. Demand both in the UK and globally continues to dramatically outstrip supply and shows few signs of slowing during the seasonally busy summer months.

In the UK, record sales of building materials coupled with strong pre-orders and full pipelines of work are all putting enormous pressure on the supply chain which, in some sectors, has not fully recovered from the impact of Covid. This suggests the unprecedented challenges around a number of key product areas, particularly imported products and materials, will likely persist into the second half of 2021.

Timber, roof tiles and some steel products continue to be in short supply, as is bagged cement which may have been impacted by some manufacturers undertaking overdue preventative maintenance.  Paints, sealants and chemical products, continue to be affected by raw material shortages, with paints additionally affected by a shortage of packaging, particularly metal cans. The situation with insulation boards has also become tighter, with PIR becoming harder to obtain and contractors actively seeking alternatives. Plasterboard has been subject to extended lead times with one major manufacturer indicating their products going on allocation.  Some regions are also reporting delayed deliveries of bricks and blocks.

Electrical products have been affected by raw material shortages, particularly steel products and semi-conductors, since Autumn 2020.  These issues are now compounded by the shipping backlog in China’s Pearl River Delta, with hundreds of container ships waiting for berths to become available. The Electrical Contractors Association and their Scottish counterpart, SELECT, are warning that the blockage already surpasses that of the Suez Canal earlier this year and is likely to lead to extended delays for electro-technical products.

The availability of hauliers is a particular issue raised within the group over the past months and it is clear that this is now a critical nationwide problem causing delays and impacting project programmes.  The UK has lost 15,000 European drivers this year due to Brexit, and 30,000 UK driver tests due to Covid, which has exacerbated the driver shortage.   The CLC’s Product Availability Group is supporting the Road Haulage Association in its discussions with the Department for Transport to address the shortage.

Inevitably, all of this is feeding into price inflation, and the expectation is that high demand coupled with tight supply will sustain elevated prices throughout the year.

As we emphasised last month, forward planning and ongoing communication throughout the supply chain is essential to assist with reliable delivery dates and to manage expectations about any shortages or allocations.

Allocation systems should be as transparent as possible, so all customers can be seen to be treated fairly and provided with both the information and the products they require to plan and complete projects in a timely manner.

Builders and contractors should also maintain open communications with their customers regarding lead times, possible product substitutions and early notice of potential price increases.


Construction Product Availability Update 28 April 2021

Statement from John Newcomb, CEO of the Builders Merchants Federation and Peter Caplehorn, CEO of the Construction Products Association, co-chairs of the Construction Leadership Council’s Product Availability working group

Construction activity continues to be strong across the UK, with government statistics and industry surveys indicating this is primarily led by the new housing, housing RMI and infrastructure sectors.  Evidence suggests a positive pipeline of work ahead, including a high level of contracts awarded during the first quarter.  With full order books, the current level of active demand across the entire construction industry will continue to put increasing pressure on the product supply chain.

In general, products are available but lead times have lengthened.  Current demand is such that it is proving difficult for manufacturers and suppliers to build up stock levels.

The worst affected product areas continue to be timber, roof tiles and roofing membranes. There is unlikely to be any improvement in timber supplies this year with little or no timber currently coming into the UK that is not already pre-sold and global demand outstripping supply.  However, the supply of roofing products is expected to improve in the second half.

Raw material shortages, stemming from global demand and other external factors such as factory closures outside the UK, continue to constrain production of PE and PP plastics, PIR insulation, paints, adhesives and other coatings, and also packaging for other product groups.

Global demand also continues to impact prices and delivery times on structural steel, internal steel products and galvanised steel. Evidence suggests that some steel products may suffer continued shortages into the second half of the year.

Pent up demand for landscaping products over the spring and summer may place an additional burden on supplies, but demand will continue to be met with longer lead times where needed.

Accurate forecasting can help alleviate availability issues. The CPA’s latest forecast was published this week and the BMF will publish their latest forecasts in May.

The CLC’s key advice is to plan in advance, work closely with your supply chain and communicate your requirements early with suppliers, distributors and builders merchants.  Collaborative, ongoing communication throughout the whole supply chain is essential.

The Product Availability Group is also exploring further solutions to alleviate other bottle necks in the supply chain such as logistics and transport, including the ability to accept deliveries outside of normal opening hours.

Construction Product Availability Update 15 April 2021

Statement from John Newcomb, CEO Builders Merchants Federation and Peter Caplehorn, CEO Construction Products Association, co-chairs of CLC Product Availability work group.

Demand for construction products remains high both in the UK and globally and is set to continue throughout 2021 in every sector.  Unfortunately, this means the availability issues we are currently experiencing are likely to worsen before they improve.

While supplies of plaster and plasterboard are much improved on last year, almost every other product group is experiencing longer lead times and, as a consequence, higher prices.

Plastics (PE and PP), cement and aggregates have joined existing lists of products in short supply, including timber, steel, roof tiles, bricks and imported products such as screws, fixing, plumbing items, sanitaryware, shower enclosures, electrical products and appliances.

Prior to the temporary blockage of the Suez Canal, we were seeing a slight lowering of both container costs and delivery times of these imported goods.  We anticipate that this will continue once the effect of the temporary closure works through.

Imports of timber will be an issue for the foreseeable future. Not enough timber is being produced to meet world demand.  Added to this, other countries are prepared to pay more to secure their supply, pushing the UK lower down the pecking order.

Steel is also experiencing strong global demand. While supply and demand are likely rebalance within the next few months, global dynamics will continue to drive prices up.

Raw material shortages constraining polymer supplies are causing production problems for plastics (lower ground drainage etc).  Coatings manufacturers are also experiencing raw material shortages beyond their control, at a time when demand is particularly high.  These issues will continue for at least 2-3 months.

All users should plan for increased demand and longer delays, keep open lines of communication with their suppliers and order early for future projects.

The CLC’s product availability group will continue to monitor the situation. The CPA and the BMF – who jointly chair the group – produce quarterly forecasts on market activity which is helping manufacturers to plan output.

Double-digit Growth Forecast for Construction Despite Product and Labour Shortages

Double-digit Growth Forecast for Construction Despite Product and Labour Shortages

Construction output is currently very buoyant and is forecast to rise by 13.7% in 2021 and 6.3% in 2022, according to the Construction Products Association’s latest Summer Forecast published today. This positive outlook comes despite the dual constraints of shortages and sharp cost rises in both imported construction products and skilled labour over the next 12 months. Infrastructure and private housebuilding are expected to be key drivers of construction growth in 2021 and 2022, while the outlook for the commercial sector remains subdued.

Major projects such as the nuclear power station Hinkley Point C, the Thames Tideway tunnel and the High Speed 2 (HS2) rail project are central to strong output in the infrastructure sector. While the CPA has revised down its infrastructure forecast for 2021 to 23.4%, it has upwardly raised its forecast for 2022 to 9.7% for 2022 owing to further delays and cost overruns on major projects. The Summer Forecasts also report an increase in client hesitancy to sign off medium-sized projects leading to a slowdown in the near-term pipeline for the sector.

As all major house builders continue to report that demand in the housing market and house price inflation continues to be robust, CPA forecasts house building starts to rise by 20.9% in 2021 and a further 9.0% in 2022. This is despite the government’s stamp duty holiday and Help to Buy schemes continuing currently in a restricted form. The outlook is particularly strong for houses outside major cities, owing to shifts in working patterns, and is likely to remain so for the next 6-9 months at least according to house builders.

Changes to the way people work as a result of the coronavirus pandemic have also positively impacted on private housing repair, maintenance and improvements (rm&i), which has been the quickest construction sector to recover since the initial national lockdown. Output in March 2021 was 19.3% higher than pre-Covid times, according to the Office for National Statistics (ONS), due to the ‘race for space’ – i.e. demand for better quality outdoor domestic leisure space and home office work environments. Most SME contractors are reporting projects lined up for at least the next six months.

In the commercial sector, the beginning of the year saw a rise in activity owing to fit-out work remodelling offices for staff to return in a socially distant manner. This was also the case in retail and leisure where refurbishing, reusing and repurposing helped prepare for reopening as social distancing restrictions eased. In addition, some larger office towers projects that had the contract signed or were started pre-Covid-19 continued in the first half of this year. Outlook for sector remains subdued, however, largely because of fewer big projects in the pipeline – particularly for new towers in London.

Commenting on the Summer Forecast, CPA Economics Director Noble Francis, said: “The key constraint to the CPA construction forecasts remains the cost and availability of imported products and skilled labour. The sharp recovery for both UK construction and also in places such as the US, has led to sharp cost increases and extended lead times for some key products such as paints and varnishes, timber, roofing materials, copper and steel. This is of concern particularly for SMEs, which account for 86% of construction employment.

“Whilst larger contractors and house builders have greater certainty in their pipelines of work and are better able to plan and purchase in advance, SMEs often purchase what they need on the day at builders merchants. This makes them subject to greater issues if supply is limited or costs have risen significantly, particularly for firms working on fixed price contracts. On the labour side, some contractors are finding that there is currently a shortage of key skills in some key hotspots of activity, which has been exacerbated by the fall in EU construction labour by 42% over the past four years according to the ONS.”

FIS Members can download a free copy of the latest Construction Industry Forecasts from the CPA here

Market Data

FIS has access to a wide range of market data from sources including the CPA, Barbour ABI and Builders’ Conference. In addition, FIIS produces a state of trade survey specifically for the finishes and interiors sector.