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Fri May 14 2021

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Weaker third quarter for construction product manufacturers

19 Oct 17 UK construction product manufacturers are seeing sales slow and costs rise, according to the latest state of trade survey.

The Construction Product Association (CPA) found that in the third quarter of 2017 sales were still up for most firms, but less markedly than in the previous quarter. In Q2 the net balance of firms reporting sales growth had been a solid 40% for heavy side manufacturers and 55% for light side manufacturers; but in Q3 the net balance was reduced to 10% and 36% respectively. Still positive territory, therefore, but less so than three months ago.

The weaker performance in Q3, along with rising costs for raw materials, fuel and energy, echoes the slower construction activity already seen across industry data and recent surveys, the CPA said. It has also lowered manufacturers’ expectations for product sales in Q4. There is no clear majority of firms on the light side anticipating an increase in sales during the October to December period, while a net balance of 21% of heavy side firms expect sales to decline.

The UK construction products manufacturing industry has an annual turnover of £55bn, employing 300,000 people across 22,000 companies. Heavy side products include steel, bricks, timber and concrete; light side products include insulation materials, boilers, glass and lighting. For the year ahead, 28% of heavy side firms anticipate an increase in product sales, while on the light side, 33% of firms expect sales to increase.

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CPA senior economist Rebecca Larkin said: “For construction product manufacturers, the near-term outlook is being clouded by the perfect storm of a broad-based rise in input costs, slower economic growth and signs of an emerging weakness in construction activity outside of private housing.

“Overall costs increased for 90% of all manufacturers in Q3. Although the survey showed inflationary pressures are anticipated to ease slightly over the coming year, the industry has turned noticeably more pessimistic about the strength of activity in coming quarters. New orders in construction fell to the lowest level in three years in Q2 and the survey suggests this will start to filter through to reduced activity on site by the end of the year.”

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