It has been a difficult three months for the UK construction industry according to the latest Construction Products Association State of Trade Survey. Both heavyside and lightside manufacturers reported declining sales compared with Q4 2025, which is the first time that sales have declined for both segments of construction product manufacturing since the end of 2023.
Cost increases were also reported by all manufacturers, with oil prices rising – and staying – above $100 per barrel following the escalation of conflicts in Iran. Cost inflation was led by raw materials, fuel and energy costs.
Wider concerns over the immediate effect on the economy and the delayed passthrough of oil, gas and commodity-price inflation, costlier shipping to bypass the Strait of Hormuz and longer-lasting disruptions to the production of petrochemicals are likely to have worsened the already-fragile confidence among developers, investors, clients and house builders. Financial markets’ immediate reaction was to price in interest rate rises, reversing expectations of gradual reductions previously factored into investment decisions, viability assessments and homebuyers’ budgets and purchasing decisions.
As a result, house builder trading updates noted reduced buyer activity and pauses to purchases of land, neither being conducive to starting new developments. This is likely to have been replicated across other construction sectors, especially those that require a large upfront investment, in commercial and industrial for example, and those projects that were already struggling with viability.
Consequently, with limited project starts, heavy side manufacturers reported a decline in sales and production, compared to both the previous quarter and year. Double-digit year-on-year falls were reported by producers of materials such as ready-mix concrete, bricks, sand and gravel. These rising costs followed heavy and persistent rain during January and February that also impacted works at the very start of the year.
Around 14% of heavyside firms, and 18% of those on the lightside reported a decrease in sales compared to 2025 Q4, with demand cited as the largest potential constraint on near-term activity.
Log into your TDUK account and read the full survey here: https://timberdevelopment.uk/resources/cpa-state-of-trade-survey-2026-q1/
