Construction Products Firms Report Increase in Sales

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Construction Products Firms Report Increase in Sales

UK manufacturers of construction products have reported an increase in sales and activity in the first quarter of 2017. This extends the industry’s period of growth to four years, despite an increase in costs.

The positive results were revealed in the latest State of Trade Survey, produced by the Construction Products Association (CPA).

The construction products manufacturing industry has an annual turnover of £55 billion, directly providing jobs for 300,000 people across 22,000 companies.

Products made by the manufacturers range from ‘heavy side’ materials such as steel, bricks, timber and concrete to ‘light side’ products such as insulation, boilers, glass and lighting.

On an annual basis, 65% of heavy side firms reported sales had increased in Q1, whilst on the light side, 38% of firms reported that sales were higher than a year earlier.

However, the majority of manufacturers also reported an increase in overall costs over the same time frame. In Q1, 73% of heavy side manufacturers and 80% of those on the light side reported an increase, with raw materials, fuel and energy presenting the highest rises, mainly due to the depreciation of Sterling during 2016.

Despite this, most manufacturers said they expected a continued rise in activity in the second quarter of this year. Among heavy side manufacturers, 68% on balance anticipate a rise in sales in Q2, with a balance of 47% of light side manufacturers anticipate a rise during the same period.

Rebecca Larkin, CPA Senior Economist, said: “Construction product manufacturers have shaken off the pessimism over future performance evident at the end of last year, and appear more confident that further rises in costs will not have a negative impact on demand and construction activity over the next 12 months.

“With Brexit-related uncertainty still providing a downside risk to decision-making, however, it is important that the government provides certainty for large public sector and infrastructure projects.”

The survey found that:

  • 45% of heavy side firms and 38% of light side firms reported that construction product sales rose in the first quarter of 2017, compared with the fourth quarter of 2016
  • On an annual basis, on balance, sales rose for 65% of heavy side firms and 38% of those on the light side
  • On balance, 68% of heavy side manufacturers anticipated a rise in sales in Q2, improving from a balance of 6% in Q4 of 2016
  • On the light side, 47% of firms expected an increase in product sales in the next quarter, compared to a balance of 29% in 2016 Q4
  • Annual cost increases were reported by 73% of heavy side manufacturers and 80% of light side firms
  • Raw materials costs rose, according to 93% of both heavy side and light side manufacturers
  • 85% of heavy side manufacturers and all light side manufacturers anticipate a further rise in costs over the coming year

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