The mood among the building materials and merchants companies at the start of 2024 remains downbeat, with merchant Travis Perkins (TPK) and brick maker Ibstock (IBST) both announcing new rounds of job cuts given the subdued demand outlook. Ibstock said it had shuttered a second brick factory at South Holmwood in Surrey, following on from the closure of its Ravenhead plant in Skelmersdale in August. Competitors Forterra (FORT) and Heidelberg (DE:HEI) have also recently closed plants, which led the GMB union in December to complain to levelling-up secretary Michael Gove that the UK’s brick industry was “on the brink of collapse”, lamenting the lack of new housebuilding.
Despite this, investor appetite for companies in the sector has been robust – the FTSE 350 construction and materials index closed last year 36 per cent higher after a strong end-of-year rally.
There are some signs of green shoots. New-build activity was still in decline in the three months to November but repair, maintenance and improvement work increased by 3.8 per cent, according to the Office for National Statistics. And new project starts in the fourth quarter were 8 per cent lower year on year but were up 14 per cent on the previous quarter, “suggesting developers’ expectations for the housing market in 2024 may be on the up”, according to Allan Wilen, economics director of data provider Glenigan.