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Mon November 23 2020

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Construction product sales still down on 2019

19 Oct Construction product manufacturers report a sales rebound in the third quarter of 2020 following the easing of Covid-19 (coronavirus) lockdown restrictions and the subsequent reopening of construction sites and supply chains.

The Construction Products Association’s state of trade survey for 2020 Q3 reports that one-third of heavy side manufacturers reported sales increasing from Q2. Sales of light side products were reported to have increased by 48% of manufacturers. Mirroring Office for National Statistics data on construction output during the quarter, product sales remained down on 2019 numbers.

It was a more mixed picture for manufacturers’ forward-looking expectations, however. Both heavy side and light side manufacturers expect the recovery to gain speed in Q4, with a net balance of 56% of all firms anticipating a rise in sales in Q4. However, when looking to the next 12 months, a balance of 24% of heavy side anticipated a fall in sales, contrasting with 21% of light side manufacturers anticipating a rise. Reflecting the uncertainty over the outlook for construction in 2021, manufacturers expect to reduce their capital expenditure next year and investment in e-business remains a priority to meet changing market patterns.

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Construction Products Association (CPA) senior economist Rebecca Larkin said: “Despite the welcome news of a pickup in activity, the Q3 survey captures the uncertainty over the recovery path for the economy and construction next year. There are already clear signs of differences in the outlook by sector, with house building subject to volatility as the stamp duty holiday ends and employment backdrop worsens, infrastructure benefiting from new and ongoing major projects, and commercial facing near-term unknowns over demand for office and retail space depending on how embedded homeworking becomes in future. The uncertainty is proving to be a catalyst for manufacturers to prepare for how new ways of working may change supply chain distribution, notably through increasing investment in developing e-commerce.”

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