Rising costs hit construction in 2011

Published:  02 March, 2011

LONDON: The costs of energy, fuel and materials have risen over the last twelve months and are expected to continue to rise in the next 12 months according to a survey by the Construction Products Association.

The association forecasts that output will fall by 2% during 2011 due to the impact of the public sector spending cuts, so this will exacerbate problems for the industry.

Product manufacturers reported that in addition to eroding margins, these increases will also raise construction costs despite the challenging economic environment.

Noble Francis, economics director at the Construction Products Association said: "More than three quarters of manufacturers reported that costs rose significantly over the last 12 months, with the last three months seeing a particularly sharp increase."

Cost rises were mainly due to fuel, but increases in the prices of copper, steel and plastics also contributed to the rise. "Looking ahead, the vast majority of manufacturers also anticipate that costs will continue to rise significantly over the next year, which will reduce margins further and push up costs of construction," he said.

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