Market demand for bricks and roof tiles continued to be very strong in the second quarter of 2022. Despite rising interest rates and inflation, the demand for new homes still outstrips supply. In the wider construction sector, a large upward revision to output in April (-0.4% to +0.3%*) means strong growth, (1.5% m/m*) in May is the sector’s seventh consecutive month of growth. New work (+2.8% m/m*) continued to rise despite the challenging backdrop of material shortages and higher input costs. However, evidence from PMI indices suggests that while demand in the sector is strong, momentum is beginning to soften.

Like many manufacturers, Wienerberger continues to be focused on maximising production volumes while maintaining quality and managing customer expectations. This hard work and the collaboration between manufacturers and merchants have undoubtedly benefited the wider construction sector in the first half of this year.

As we move to the second half of the year, the outlook remains positive and is supported by the latest CPA State of Trade Survey, April 2022, which found that 80% of heavyside manufacturers expect rising sales. While demand is likely to be robust, the sector must guard against complacency and be cautious of weakening demand.

As consumers start to tighten up on basic needs (a recent ONS survey suggests 46% of adults are buying less food, up from 18% at the start of the year) it shouldn’t be a surprise if reduced spending starts to impact the construction sector. In the coming months, we’ll continue to see increasing energy prices, adding to the cost of living crisis currently being experienced by many.

In July, research firm Cornwall Insight published new, higher forecasts of energy prices that were 10% higher than those forecast just two weeks prior. With energy being a significant input into many construction products, we will continue to proceed through the year with cautious optimism.

*ONS Construction output in Great Britain: May 2022