Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to the newest version of your browser.

Your browser appears to have cookies disabled. For the best experience of Construction News, please enable cookies in your browser.

Welcome to the Construction News site. As we have relaunched, you will have to sign in once now and agree for us to use cookies, so you won't need to log in each time you visit our site.
Learn more

Margins squeezed by cost increases

Rising materials and labour costs are continuing to squeeze contractors' margins, according to the latest trade survey from the Construction Products Association.
But growth continued during the third quarter of the year and firms remain optimistic about the next 12 months.

Association chief executive Michael Ankers said: 'An increase in public sector building work helped sustain industry growth during the third quarter, offsetting a weakening in private sector activity, especially in consumer and housing market-related areas.

'The industry anticipates that further increases in public sector work will sustain industry growth over the next 12 months as the Government strives to deliver planned investment in schools, hospitals, housing and the transport infrastructure.'

But contractors' leaders sounded the alarm about rising prices.

Stephen Ratcliffe, chief executive of the Construction Confederation, said: 'Contractors are experiencing increased pressure on margins from rising material and labour costs and a deceleration in tender price inflation.

'As margins are still pretty lean in comparison with other industries, the ability to absorb these cost increases is thin and it is inevitable that they will be passed down to the client.

'Building contractors remain concerned about the recruitment of skilled site labour.'