As of January 9, 2024, the Welsh Government is taking concrete steps to boost building safety with a focus on the use of combustible materials. This is part of an ongoing commitment to uphold the strictest safety standards in construction and maintenance.

At a headline level, it was a mixed third quarter for firms in the construction supply chain.

Construction product manufacturers reported a second quarter of growth in sales volumes, although for the heavy side, sales remained lower than a year earlier. Civil engineering contractors reported an increase in workloads, marking the sixteenth quarter of growth. The strength in infrastructure has been echoed by chartered surveyors throughout this period and in Q3, was the primary driver of their workloads growth. Surveyors also reported very early signs of a recovery in private housing, commercial and public non-housing workloads, although public housing remained a sector in decline. It was a difficult quarter for SME contractors, however, with a fall in workloads reported across all sectors of operation: new build housing, repair, maintenance and improvement (RM&I) and industrial/commercial. A fall in enquiries across all three sectors was also reported, suggesting that the recovery in construction will materialise slightly later into 2025 than previously expected. Further interest rate cuts are widely expected next year, underpinning hopes that the pickup in mortgage lending since Summer will continue into the key Spring selling season and support house builder confidence, as well as drive an increase in property transactions for existing homes that then lead to improvements work. Consumer confidence will be key, however. With no direct impact on personal finances or taxation in the Budget in October, measures of consumer confidence showed some improvement towards the end of 2024. in contrast, the Chancellor’s increase in employers’ National Insurance Contributions and increase in the National Living Wage, both coming into force in April, have been flagged as a significant cost pressure for businesses. A broad base of cost pressures was already reported in Q3, led by wages and salaries for manufacturers, raw materials for SME contractors and 40% of civil engineering contractors reported annual cost increases of more than 5%. The extent of passthrough into client and end user costs is a clear risk to the speed of the construction recovery, whilst the impact on other sectors of the economy such as retail may lead to a fresh deterioration in consumer and household confidence and spending.

The headline results for the State of Trade survey continued to signal signs of improvement for construction product manufacturing in the third quarter of 2024. Compared to Q2, product sales volumes increased for both heavy side and light side firms, on balance, for 55% of the heavy side and 8% on the light side. Comparing sales volumes with the same period of a year earlier, 27% of heavy side manufacturers still reported a fall, whilst a balance of only 8% reported an increase on the light side. These dynamics mirror those reported in official ONS construction output data, with monthly and quarterly increases in activity over Summer, but activity still lower than a year ago.

FIS members can download the full findings from the CPA State of Trade survey here.

Total GB contract awards fell 0.8% in 2023, but at a regional level, growth rates were spread across a huge range of between +374% and -95%.

This annual regional report produced by the Construction Products Association in collaboration with Barbour ABI analyses 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.

Looking at contract awards data for 2023 across the 168 local authority regions in Great Britain, there are clear hotspots for upcoming construction activity over the next 6-24 months in Great Britain, with hotspots outnumbering coldspots by almost three-to-one overall and six-to-one for infrastructure.

The health of the construction industry improved further in the second quarter of 2024, building from the stabilisation seen in Q1 to signs of modest growth emerging in the three months April to June.

Product manufacturers’ sales increased in the quarter, marking the first rise in two years for heavy side producers, whose products and materials typically feed into the early, structural build phases. SME contractors’ workloads were also reported to have increased, which follows two quarters of decline, albeit driven by a sole sector – repair, maintenance and improvement (RM&I).

Workloads were reported to have still contracted in new build housing and commercial/industrial. Meanwhile, workloads for civil engineering contractors expanded a run of growth to 15 straight quarters, driven by the activity underway on major infrastructure projects, in the energy sector and on frameworks in regulated sectors such as water and sewerage. This sectoral split was echoed in chartered surveyors’ workloads in Q2: infrastructure continued to provide activity, whereas workloads were reported lower in housing, commercial and industrial. Underscoring that a pickup in activity is coming off the back of a period of subdued economic growth and strong inflation, with households and businesses also adjusting to an environment of higher interest rates, forward-looking indicators were largely positive, but tentative. Civil engineering contractors’ order books rose in Q2, along with chartered surveyors and product manufacturers anticipating growth in workloads or sales over the next 12 months.

SME contractors reported that enquiries still decreased in Q2, and in all three main sectors of operation, although the overall net balance was the best in a year. One key longer-term theme for the construction supply chain was pervasive in all the Q2 surveys: the labour force – whether it be cost pressures from wages and salaries, difficulties in recruiting or employment cuts.

FIS members can read the full Construction Trade Survey results from the Construction Products Association, here