In a statement, co-chairs John Newcomb, CEO of the Builders Merchants Federation, and Peter Caplehorn, CEO of the Construction Products Association, said that demand remains low, short-term availability remains stable, but the main risk comes from rising energy and fuel costs that are driving up prices.
In the three months to January 2026, output dropped by 2%, the fourth consecutive month of decline. Infrastructure, energy-efficiency work, and some commercial and industrial projects saw slight growth, but this was not enough to offset continued weakness in the new-build housing and residential repair, maintenance, and improvement sectors.
The biggest risk the group identified comes, the statement said, from the impact of the Middle East conflict. Most construction products used in the UK are sourced domestically or in Europe, making risk of availability low. However, some products, such as wall and floor tiles, as well as exterior porcelain and sandstone, from India, have been disrupted by rising fuel prices there.
The main challenge, however, the group said, is the rapid rise in energy prices and their immediate impact on material costs, particularly for products with energy-intensive manufacturing processes or derived from oil-based raw materials.
At the start of the supply chain, many of these manufacturers are facing significant cost increases, although some will be protected by energy price hedges in the medium term.
Many manufacturers recognise the industry鈥檚 challenges, adopting a measured approach, providing clear explanations and reasonable lead times when passing on additional costs. However, increased transport costs are proving to be less predictable.
Merchants, housebuilders, and contractors all expressed concerns about any rapid imposition of surcharges with limited supporting evidence and insufficient notice of cost increases. Mechanical engineers, the group said, were already seeing increases in copper prices, with steel prices now changing so rapidly companies cannot obtain reliable quotes.
The group warned these costs will be pushed along the supply chain, and called for collaboration, early forecasting and sharing of requirements.
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