Two thirds of contractors hit by materials inflation

Materials cost inflation is hitting two thirds of contractors as the drop in the value of the pound hits import prices, according to the Construction Product Association (CPA).

In its latest trade survey covering the third quarter of this year, the CPA finds overall costs increased for 66% of main contractors and 59% of civil engineering contractors.

Main contractors are still facing problems recruiting some trades, with 54% reporting difficulties hiring bricklayers, 47% for carpenters and 43% for plasterers.

In better news, the survey reported a 14th consecutive quarter of growth in output, with firms across all areas of construction reporting an increase in activity.

Rebecca Larkin, senior economist at the CPA, said: “Following the EU referendum, the entire construction supply chain reported favourable conditions and growth in activity in Q3.

“Forward-looking expectations for Q4 and the year ahead were more pessimistic, with the majority of orders and enquiries balances the lowest in two years, or driven by a single sector: private housing.

“A further factor that stood out as a downside risk to activity in the near-term is the sharp rise in the cost of imported raw materials due to the recent depreciation in Sterling, which is providing a dual hit to construction costs alongside existing wage inflation pressures.”