Construction Product Manufacturers Report Another Fall in Sales and a Rise in Costs

The Construction Products Association’s State of Trade Survey for the third quarter of 2026 showed that sales volumes fell for both heavy side and light side product manufacturers.

Alongside this, fuel and raw materials costs rose for all manufacturers.

Quarterly Decline

In 2026 Q3, a net balance of 4% of heavy side manufacturers and 25% of light side manufacturers reported a decrease in product sales volumes, compared to the previous quarter.

This was the third consecutive quarter that both segments of product manufacturing have reported a quarterly decline in sales. Manufacturers’ sales were also lower compared to a year earlier.

Inflationary Pressures

Following the period of elevated oil prices between February and May, product manufacturers reported the clear passthrough of inflationary pressure.

All manufacturers reported that fuel and raw materials costs increased compared to year earlier, with the heavy side also recording widespread increases in energy costs.

In response to weak demand and higher input costs, manufacturers also reported low capacity utilisation, a decrease in headcount and cuts to capital investment in Q3.

Rebecca Larkin, CPA Head of Construction Research

Rebecca Larkin, CPA Head of Construction Research, said: “Higher oil prices earlier in the year have been quicker to pass through to construction product manufacturers than the wider economy, given the energy-intensive nature of parts of the sector, where energy costs can account for up to one-third of total costs, particularly for manufacturers on the heavy side.

“At the same time, manufacturers are also struggling with low demand as uncertainty over geopolitical risk and the path of inflation and interest rates has held off decision-making on large project starts in the commercial and industrial sectors and higher mortgage rates have noticeably reduced house building demand.

“Weak construction activity has clear knock-on effects for construction product manufacturing. An extended period of falling sales is now leading to capacity being taken offline, reductions to the labour force and decreases in capital investment.

“With the government’s Your First Home scheme not active until April, another list of roads projects that aren’t going ahead, and a sweeping cut to departmental capital budgets still to come, the government has not yet acted to ensure that stimulus now will protect skills and capacity for the future.”

Key survey findings include:

• A balance of 4% of heavy side firms reported that construction products sales fell in 2026 Q3 compared with Q2.
• On balance, 25% of light side manufacturers reported that product sales decreased in Q3, which was the lowest balance since 2023 Q4.
• Sales also decreased in annual terms for 39% of heavy side manufacturers and 38% of light side manufacturers, on balance.
• All manufacturers reported an increase in fuel and raw materials costs.
• On balance, 8% of heavy side manufacturers and 17% of light side manufacturers reduced employment compared to a year earlier.

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