Construction Trade Survey 2023 Q2

Another Mixed Quarter for the Construction Supply Chain

The CPA’s latest Construction Trade Survey for 2023 Q2 showed a mixed view on activity across the construction supply chain. Here are some key findings from the latest survey:

  • Output & Sales: A mixed quarter for product sales, workloads growth for SME contractors and chartered surveyors was split by sector of activity.
  • Expectations: Manufacturers’ expectations were mixed, new orders increased for civil engineering contractors, SME enquiries increased overall, but growth was driven by a sole sector.
  • Costs and Constraints: Costs moderated in Q2 but inflation remained broad-based, with issues related to finance and labour availability rising in prominence

Another Mixed Quarter for the Construction Supply Chain

Surveys from across the construction supply chain continue to present a mixed view on activity in the second quarter of 2023. Whether it is the survey results from construction product manufacturers, SME building contractors, civil engineering contractors or chartered surveyors, the split in performance that emerges mirrors official ONS data on construction output and new orders, as well as other industry surveys that show strength in the infrastructure, public non-housing and repair, maintenance and improvement sectors, with a particular focus on energy efficiency work for the latter.

In contrast, workloads in new build housing, commercial and industrial have fallen back, with demand and confidence in these sectors the most affected by sluggish economic growth and the sharp rise in interest rates since the middle of 2022.

Combined with the high rates of input cost inflation that construction has experienced since 2021, the additional pressure of notably higher borrowing costs has reined in demand from potential homebuyers and made the large up-front investments required for large offices, leisure, factories and warehouse projects less appealing.

Whilst the cost of finance continues to rise, and the Bank of England’s monetary policy tightening cycle not expected to peak until the end of the year, there are, at least, signs that other cost pressures continue to subside. Headline cost balances continued to ease to the levels last seen in 2020 and 2021, prior to the Russian invasion of Ukraine that led to significant increases in global oil and commodity prices.

Find out more about the Construction Trade Survey in the CPA’s latest press release, and if you are a member, you can download the full report here.