Prices for most construction products are “softening” amid the downturn in activity, according to the Construction Leadership Council (CLC).
In a statement, the co-chairs of the CLC Product Availability Working Group said there was “good availability across all products and regions, similar to pre-pandemic levels”.
But John Newcomb and Peter Caplehorn, the respective chief executives of the Federation of Builders’ Traders and the Building Products Association, added that “while it appears to be positive news, it is largely driven by a general decline continuous construction activity and therefore product demand.
“The picture varies across different sectors and regions of the country, with demand in some holding steady or only slightly declining, while others are experiencing more challenging conditions.”
The presidents explained that infrastructure project cancellations and delays had reduced demand for primary asphalt, ready mix, sand and gravel, while a slowdown in private housing construction amid “volatile” consumer confidence consumers was also an important factor.
Chairs said sales through builders’ merchants were now falling and were not expected to pick up until the second half of 2024.
This is leading to “price smoothing” for most products, with the exception of those that require a lot of energy to manufacture, as well as plumbing and electrical products.
Group members have highlighted “increasing cash flow and liquidity issues”, with “hardened payment behaviours” among tier one, two, three and four contractors contributing to market pressures, and builders’ merchants experiencing slower payments from customers.
Newcomb and Caplehorn said “everyone in the industry” has a role to play in addressing these issues.
The chairmen noted that some companies have had their credit ratings downgraded, which was putting additional pressure on the industry due to difficulties in obtaining insurance.
The task force is also concerned that labor and skills shortages could worsen with further job losses, resulting in a weaker supply chain when growth returns.
The CLC said it will press the government for support around this issue and has “expectations of some progress” for the Autumn Statement in November.
