Growth registered in UK construction product manufacturing industry

Vania Goncalves 12 Apr 2017 EUROPE BUSINESS

The UK construction product manufacturing industry registered an increase in sales and activity in the first quarter (Q1) of 2017, according to a survey.

The latest findings in the Construction Products Association (CPA) State of Trade Survey extends the industry’s period of growth to four years.

65% of the heavy side firms, which offer products like steel, bricks, timber and concrete, reported that sales had increased in Q1, while only 38% of the light side firms, which offer insulation, boilers, glass and lighting products, reported that sales were higher than a year earlier.

Despite the increase in sales, manufacturers also noticed an increase in costs — 73% of the heavy side manufacturers and 80% of the light side manufacturers stated this.

The strongest pressures were felt in the input costs for raw materials, fuel and energy, owing to the depreciation of the Sterling during 2016.

Rebecca Larkin, CPA Senior Economist, said: “Construction product manufacturers have shaken off the pessimism over future performance evident at the end of last year and appear more confident that further rises in costs will not have a negative impact on demand and construction activity over the next 12 months.

“Heavy side manufacturers were most exposed to the effects of Sterling’s depreciation with 93% of firms reporting a rise in raw materials costs and 69% reporting higher costs for fuel and energy in Q1. On balance, they were also the most optimistic on near-term sales expectations, implying that the wider construction supply chain is actively managing its cost pressures.  

“With Brexit-related uncertainty still providing a downside risk to decision-making, however, it is important that government provides certainty over the pipeline for large public sector and infrastructure projects that will help sustain activity.”

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