Compiled in conjunction with the CPA (the Construction Products Association) the CAB State of Trade Survey is completed alongside the Spring 2024 edition of the CPA’s Construction Industry Forecast.
CAB Members report that the first quarter of 2024 for aluminium used in construction saw a return to growth in sales for the period with an anticipated growth in the sector for the second quarter ahead. On the downside the CAB Membership is facing the pressures of increased costs of raw materials and the rise in labour costs as the Industry struggles to acquire experienced labour to meet the upturn in sales.
Despite the CPA forecast expecting a fall in construction output of 2.2% in 2024 the outlook for CAB Members remains very positive. Add to this the anticipated growth in the construction sector in 2025 of 2.1%, future aluminium sales seem to be on firmer ground.
Whilst the wider construction industry reported a drop in ‘Historic Sales Volumes’ of 36% on net balance of respondents, possibly due in part to the very poor weather conditions early in the year, 14% of CAB Members saw an increase in sales in the first quarter.
‘Expected Sales Volumes’ in the next quarter sees CAB members very optimistic in sales growth with 77% of Members on net balance anticipating increases with 46% of the wider construction sector anticipating growth. Anticipated growth for the year ahead remains optimistic.
‘Sales Volumes – Quarter-on-Quarter,’ indicates that the market for aluminium in construction remains volatile with 29% Members reporting a downturn of over 5% whilst 43% of the membership report an increase in sales of over 5%.
The pressure on costs is showing an increase over the last year within the aluminium in construction sector. In ’Historic Unit Costs’ 50% of respondents on net balance reported increases in costs in the last quarter with 58% of respondents expecting further increases in the quarter ahead. This increases to 83% of Members expecting increases in the year ahead. These rises in costs are well ahead of the wider construction industry and reflect labour costs and the increased use of aluminium with lower rates of embedded carbon often sourced at a premium.
Pressures on costs remain, under ‘Cost Factors’ members report that the main influence for the last year remains wages and salaries. From a 0% on net balance of respondents a year ago, pressures on raw material costs have increased during the last year and now 71% of the membership on net balance indicate this as a cost factor, this is closely followed by pressures of rising energy costs.
Reviewing ‘Likely Constraints on Activity Over the Next 12 Months’ the CAB membership during the last year have put constraints simply down to demand. In this report 79% of respondents claimed future demand as a constraint suggesting that future capacity for growth is available.
For the first time in the last 12 months ‘Expected Capacity Utilisation’ for the quarter ahead shows a real increase over ‘Historical Capacity Utilisation’ which is based on a net balance of respondents stating an operating capacity of over 90%. This further indicates that the CAB membership sees a future increase in orders.
Whilst ‘Labour Costs’ remain high based on the net balance of respondents, this does seem to be softening during the year ahead compared to the last 12 months.
Reviewing the trends graphs for the year to date we can see that there are some correlation between ‘Historic Sales Volumes’ and ‘Expected Sales Volumes’, whilst there has been a clear dip in the market during the last 12 months expectations for the next quarter remain higher than a year ago based on a net balance of respondents.
Whilst ‘Historic Unit Costs’ show increases in the last 12 months, more members are reporting ‘Expected Unit Costs to rise in the coming quarter which is up from 18% to 83% of members on net balance.
We believe that the report indicates a cautiously optimistic year ahead for our membership. Should you wish to learn more about the use of aluminium used in construction, please contact CAB directly, or why not consider joining the Association and be recognised as being involved in supporting your Industry and helping to shape its future. More information on our website at c-a-b.org.uk
