Construction Product Manufacturing Recovery Underway but Cost Pressures Return

THE RESULTS of the Construction Products Association’s State of Trade Survey for the fourth quarter of 2024 showed another consecutive period of growth in construction product manufacturers’ sales.

The CPA reports broad expectations of continued growth over the next 12 months as the construction recovery accelerates.

In Q4, 24 a balance of 25% of heavy side manufacturers reported that sales of construction products increased compared to Q3, marking the third straight quarter of growth.

Alongside this, 31% of light side manufacturers reported a rise in product sales. The heavy side also recorded the first annual growth since Q3, 22. This was expected due to comparison with the low point of the downturn in housebuilding and repair, maintenance, and improvement (RM&I) at the end of 2023.

Recovery Underway but Cost Pressures Return

Both heavy and light side manufacturers anticipate continued growth in 2025. However, they are currently facing rising wage and raw material costs, which are expected to continue in the near-term.

All heavy side manufacturers reported an increase in wages and salaries and raw materials costs in Q4. Additionally, all heavy side manufacturers reported, and 93% of those on the light side, expected costs to increase over the next 12 months.

Recovery Expectations

Rebecca Larkin, CPA Head of Construction Research at the Construction Products Association said: “Our surveys have shown three quarters of sales growth across product manufacturers, which appears to confirm that demand from construction is progressing from stabilisation into the recovery phase.

“The pickup expected in the two largest sectors of construction – private housing new build and repair, maintenance and improvement – no doubt underpinned expectations of that recovery gaining pace throughout 2025.

“The inflationary backdrop suggests there will be some headwinds, however. Wages and raw materials were reported as the key drivers of input cost inflation in Q4. Although manufacturers anticipate increasing headcount to respond to the pickup in demand and sales this year, they will also have to contend with the higher costs of doing so when employer National Insurance Contributions are raised in April.”

Key Findings

Key survey findings include:

• A balance of 25% of heavy side firms and 31% of light side firms reported that construction products sales rose in 2024 Q4 compared with 2024 Q3
• All heavy side manufacturers and 43% of light side manufacturers anticipated a rise in sales over the next 12 months
• All heavy side manufacturers and 86% of light side manufacturers reported an increase in costs compared to a year earlier
• All heavy side manufacturers and 93% of light side manufacturers anticipated an increase in costs over the next 12 months
• The largest balances for cost increases were reported for wages & salaries and raw materials
• Three-quarters of heavy side manufacturers and one-third of light side manufacturers anticipated an increase in their labour force over the next 12 months

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