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Wed May 29 2024

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Construction product orders slow down in Q2

2 Jul 12 Construction product manufacturers are suffering from a slump in sales and are gloomy about future prospects, according to a new survey.

The Construction Products Association’s latest State of Trade Survey indicates that, following a relatively good first quarter of the year, product manufacturers suffered from a slowdown in sales in the second quarter.

Some 45% of heavy side firms reported that sales fell between Q1 and Q2, and 6% of these firms have reduced head count in the past year.

The brighter news is among light side firms, 20% of whom reported that sales rose between the first and second quarters of 2012. And 8% of light side firms increased employment over the same period.

However, employment remained static for the vast majority of firms.

Around 45% of heavy side manufacturers and 73% of light side manufacturers invested in product improvement.

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Manufacturers continue to be boosted by exports, 11% of heavy side manufacturers and 25% of light side manufacturers stated that exports rose over the past year. Furthermore, a larger number of both heavy and light side firms are turning to exports to offset subdued domestic demand. 40% of heavy side firms exported products in Q2 and 70% of light firms reported that they were now exporting.

Commenting on the figures, Construction Products Association senior economist, Kelly Forrest said: “With public sector cutting spending and private sector construction adversely affected by events in the euro zone, it is unfortunately unsurprising to see product sales affected in Q2.

“Heavy side manufacturers reported that sales fell compared with Q1 and compared with a year ago. Sales of light side products, which tend to be used later in the construction process, continued to rise in Q2, yet the fall in heavy side sales suggests the second half of the year will become increasingly challenging.

“Nearly all of the firms responding to the survey expressed concern about the strength of demand over the next 12 months. It is their primary concern.

“Despite recent falls in oil and commodity prices, cost inflation continues to be a serious issue for product manufacturers. 84% of heavy side firms and 62% of light side firms reported that costs continued to rise as long term contracts have ensured that recent price falls have not fed through yet.”

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