Growth Returns in Q2 but Labour Cost Pressures Intensify

CONSTRUCTION PRODUCTS manufacturing returned to growth in the second quarter of 2025, according to the Construction Products Association’s latest State of Trade Survey.

Heavy side manufacturers reported an increase in sales during the quarter, returning to growth after a weak Q1, whilst for light side manufacturers, a run of growth expanded to 6 quarters.

In 2025 Q2, a balance of 53% of heavy side manufacturers reported that sales of construction products increased compared to previous quarter. One-third of light side firms reported increased sales, with manufacturers reporting growth in each quarter since 2023 Q4,

Growth Returns

Manufacturers anticipate the construction recovery to continue over the next 12 months, with 62% of heavy side firms and 53% of light side firms expecting sales to rise over the next 12 months, on balance.

The impact of April’s rise in the National Living Wage – spurring increases in subsequent pay grades – and the rise in National Insurance Contributions paid by employers was evident as 93% of heavy side firms and 94% of light side firms reported an increase in wages & salaries compared to a year earlier.

Signs of Recovery

Rebecca Larkin, CPA Head of Construction Research

Rebecca Larkin, CPA Head of Construction Research, said: “The return of growth for the heavy side and an extended run of growth for the light side heralds the signs of recovery for construction demand. An increase in heavy side sales typically aligns with new activity and starts on site and gives our sector some confidence that construction output will start picking up – albeit gradually – as we move into the second half of the year and households, businesses and investors gain confidence to give the green light to planned projects.

“The survey results highlight that challenges remain, however, not least that the strength of demand remains a concern, but in a quarter that dealt a multiple hit to employers’ wage bills, higher labour costs are adding to long-standing price pressures in the supply chain.”

Key Points

Key CPA survey findings include:

• A balance of 53% of heavy side firms reported that construction products sales rose in 2025 Q2 compared with Q1
• On balance, 33% of light side manufacturers reported that product sales rose in Q2, marking a sixth quarter of growth
• 62% of heavy side manufacturers and 53% of light side manufacturers anticipated a rise in sales over the next 12 months
• Over 90% of manufacturers reported an increase in wages & salaries costs compared to a year earlier (93% for the heavy side and 94% for the light side)
• Costs from taxes were also reported higher by 71% of heavy side firms and 93% of light side firms
• 42% of heavy side manufacturers and 65% of those on the light side cited ‘demand’ as a constraint on sales over the next 12 months

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