Market Overview ‘THERE ARE SIGNS WE’RE MOVING TO A MORE BALANCED YEAR’ The past 12 months have been turbulent for the construction industry, not least of all in the supplier market – material shortages have begun to ease, but there have been new challenges to face within regulation and authenticity. There has been positive growth in construction output during the latter half of the year, but it is slow, and not all sectors are experiencing the increase. As we embark on <strong>2024</strong>, Adrian Buttress (pictured), MD of PermaGroup, reviews 2023 and looks at what may be in store for the year ahead... There has been a positive shift in construction projects for certain areas of the industry, but I think there have been undoubted challenges that have put many businesses to the test. The Office for National Statistics (ONS) reported that monthly construction output increased 0.4% in volume terms in September 2023; this came solely from an increase in repair and maintenance (2.1%) but was partially offset by a decrease in new work (0.8% fall) on the month. At sector level, three out of the nine sectors saw a rise in September 2023, with the main contributor to the monthly increase seen in private housing repair and maintenance, which increased 3.0%. So, while there are some businesses that will be experiencing a lift, the struggles continue for others. Battle on costs One of the circumstances that we have picked up on is the competitive push on price cuts to win more business, as the industry continues to try to encourage the uptake of new work. This unfortunately only adds to the problem, as consumer spending also remains low. It has therefore been important for supply and distribution firms to educate their contractors and consumers about the importance of quality, reliability and compliance – rather than focusing on a price tag. More than ever, cowboy products have entered the market to take advantage of people looking to make savings, but in the long run this can turn out to be a costly mistake. Despite the availability of materials returning to post-pandemic levels, there is now a greater risk of cheaper and inferior products becoming lost in the mix if contractors aren’t aware of the quality assurances to look out for. It can be tempting for contractors to seek low costs on behalf of their clients, however, compliance has and always will ensure long-term savings and reliability. Any good supplier should know the tell-tale signs of a substandard product, and price is a big factor, so we’re urging all our customers and clients to stay vigilant well into the new year. Financial stability Looking ahead, I think for the first part of <strong>2024</strong> the market will be fairly similar in terms of the economic climate, with interest rates and inflation still requiring some improvement for both businesses and consumers. There have been significant steps to reduce inflation, and this will hopefully encourage a better flow of spending and more informed choices, which will greatly benefit suppliers. Economists say the main reason for the latest drop is a reduction in the energy price cap, which took effect on 1 October. This is also an important reminder of the whole industry’s role in helping to bring energy use lower, by offering more efficient solutions and again, encouraging sound investments and reliable installers. This applies for both commercial and domestic projects, and requires full supply chain cooperation from specifying efficient solutions to correct effective installations. In the latter part of this year, I hope to see more normality return to the sector, in terms of prices levelling out, which will help to overcome some of these challenges and ensure trustworthy brand names and businesses are more visible. Final thoughts Despite many difficult obstacles in 2023, there are signs indicating we are moving into a more balanced year for the sector. While there are some areas we cannot plan for, we can still maintain personal development, training, industry awareness and overall, being a trusted resource for customers and contractors. If we have learnt anything from the past few years, it’s about keeping these core fundamentals even during difficult periods. PermaGroup is on track for record sales, which my team and I are proud to have achieved and to take into <strong>2024</strong>. We have used the past year (2023) to make some ambitious growth plans including introducing more members to our team and appointing a new Managing Director. We also have some more exciting announcements that will start to roll out as soon as <strong>January</strong>. Contact PermaGroup permagroup.co.uk/ 24 TC JANUARY <strong>2024</strong>
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