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Wed August 21 2019

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Construction manufacturers see sales slow

26 Jul Activity in the UK construction products manufacturing sector seems to have weakened in the second quarter of 2019, with heavy side manufacturers reporting a fall in sales and a slowdown in hiring during the quarter.

After a strong first quarter, mostly driven by stockpiling ahead of the original 29th March Brexit date, construction product manufacturers report a weak performance in the second quarter.

The Construction Products Association’s state of trade survey for 2019 Q2 reveals that a net balance of 6% of heavy side manufacturers reported a fall in sales compared to Q1. Among light side manufacturers, a balance of only 9% reported that sales increased. Both numbers were down on Q1 and were the weakest in nearly two years.

Year-on-year sales increased for a net balance of 20% of heavy side and 9% of light side firms. These numbers, though positive, were also lower than in previous CPA trade surveys.

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Looking ahead to the rest of the year, both heavy side and light side manufacturers anticipate sales to increase, although for the heavy side, the balance of 27% was the lowest in two years. In addition, heavy side hiring was at a six-year low in Q2, suggesting the industry is in cautious mode.

CPA senior economist Rebecca Larkin said: “It is difficult to pinpoint whether the weakness in manufacturers’ sales in Q2 reflects merely an unwinding of the stockpiling by construction firms that occurred in Q1, a more concerning slowdown in the volumes of work on the ground, or a combination of both. Nevertheless, manufacturers have sounded a note of cautious optimism and anticipate that sales will continue to grow over the next 12 months. However, over two-thirds of firms highlighted demand as the key constraint on future activity and hiring looks to have taken a back seat. Demand in the commercial, industrial factories and housing RM&I sectors has already started the year on a loose footing, meaning there’s a lot resting on the housing and infrastructure sectors to keep construction activity afloat.”

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