The growing threat is highlighted in the latest Construction Product Association’s trade survey.
It shows overall costs increased for 59% of civil engineering contractors while 66% of main contractors reported raw materials costs rose in Q3 compared with the previous quarter.
Skills shortages continue to push up wage costs as 54% of main contractors reported difficulties recruiting bricklayers, 47% for carpenters and 43% for plasterers.
Workloads are holding up well with the survey reporting a 14th quarter of consecutive growth with output rising in all sectors.
Rebecca Larkin, Senior Economist at the CPA, said, “Following the EU referendum, the entire construction supply chain reported favourable conditions and growth in activity in Q3.
“Forward-looking expectations for Q4 and the year ahead were more pessimistic, with the majority of orders and enquiries balances the lowest in two years, or driven by a single sector – private housing.
“A further factor that stood out as a downside risk to activity in the near-term is the sharp rise in the cost of imported raw materials due to the recent depreciation in Sterling, which is providing a dual hit to construction costs alongside existing wage inflation pressures.”