Construction to suffer further from input costs

The costs of energy, fuel and materials will continue to rise over the next year, according to a survey by the Construction Products Association.

Product manufacturers reported that in addition to eroding margins, the increases will raise construction costs despite the challenging economic environment.

Over three-quarters of manufacturers reported that input costs rose significantly during the last 12 months with 97% of them reporting that fuel costs rose significantly. 65% expect this to continue over the next 12 months.

Three-quarters of manufacturers questioned said that gas prices had risen significantly during the last 12 months, with a further 43% expecting them to carry ob doing so.

Noble Francis, economics director at the CPA said: “More than three quarters of manufacturers reported that costs rose significantly over the last 12 months, with the last three months seeing a particularly sharp increase.

“Cost rises were mainly due to fuel, but increases in the prices of copper, steel and plastics also contributed to the rise. Looking ahead, the vast majority of manufacturers also anticipate that costs will continue to rise significantly over the next year, which will reduce margins further and push up costs of construction. The Association is forecasting that output will fall by 2% during 2011 due to the impact of the public sector spending cuts, so this will exacerbate problems for the industry.”

About Fiona Russell-Horne

Group Managing Editor across the BMJ portfolio.

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