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Tue February 19 2019

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Manufacturers' uplift hints at Brexit stockpiling

25 Jan The UK construction products manufacturing sector saw a rise in factory output at the end of 2018, and it expects this to continue in 2019.

The Construction Products Association’s state of trade survey for the fourth quarter (Q4) of 2018 indicates that product manufacturers grew sales during the quarter, recovering from the weather-related weakness seen at the beginning of 2018.

There is also a suspicion of contractors stockpiling products ahead of Brexit for fear of supply chain disruptions.

For heavy side manufacturers, a balance of 27% of respondents reported that sales increased in Q4 2018, while on the light side half of manufacturers also reported that sales rose, marking the strongest increase of 2018.

Growth in factory output is anticipated to rise further in the opening quarter of 2019, respondents said.

However, despite the weakness of the pound, which has pushed up the cost of imported materials, there has been no increase in exports of UK construction products.

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CPA senior economist Rebecca Larkin said: “These results add further evidence that product manufacturing entered 2019 on a strong footing, driven by increased construction activity in the housing and infrastructure sectors. Reading between the lines, given the elevated uncertainty over the government’s Brexit strategy, manufacturers’ sales may have received a boost from precautionary, near-term stockpiling further down the supply chain, and this is also likely to have contributed to the optimism over what is an otherwise hazy outlook.

“Raw materials and wage bills drove input inflation during Q4 and with a large proportion of manufacturers anticipating further cost rises this year, political confirmation of future trading conditions for materials and component imports will help in dispersing some of the uncertainty currently clouding the supply chain’s planning.”

MPU

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