Activity in the construction products manufacturing sector was reported to have weakened in the second quarter of 2019, with heavy side manufacturers reporting a fall in sales and a slowdown in hiring during the quarter.
The Construction Products Association’s State of Trade Survey for 2019 Q2 reveals that 6% of heavy side manufacturers, on balance, reported a fall in sales compared to Q1. Among light side manufacturers, a balance of only 9% reported that sales increased. Survey balances for annual growth in product sales were also markedly weaker for all manufacturers.
Looking forward to the rest of the year, both heavy side and light side manufacturers reported that they anticipate sales to increase, although for the heavy side, the balance of 27% was the lowest in two years. In addition, heavy side hiring was at a six-year low in Q2, suggesting the industry is adopting a cautious approach as we enter a period with a new Prime Minister and rising uncertainty over Brexit.
Rebecca Larkin, CPA Senior Economist said: "It is difficult to pinpoint whether the weakness in manufacturers’ sales in Q2 reflects merely an unwinding of the stockpiling by construction firms that occurred in Q1, a more concerning slowdown in the volumes of work on the ground, or a combination of both. Nevertheless, manufacturers have sounded a note of cautious optimism and anticipate that sales will continue to grow over the next 12 months. However, over two-thirds of firms highlighted demand as the key constraint on future activity and hiring looks to have taken a back seat. Demand in the commercial, industrial factories and housing RM&I sectors has already started the year on a loose footing, meaning there’s a lot resting on the housing and infrastructure sectors to keep construction activity afloat."
Key survey findings include:
- On balance, 6% of heavy side product manufacturers reported that sales fell in the second quarter of 2019 compared with the first quarter. A balance of 9% of light side manufacturers reported a rise in sales.
- On an annual basis, sales increased for 20% of heavy side and 9% of light side firms.
- On balance, 20% of heavy side manufacturers anticipated a rise in sales in Q3 and 27% expected sales to increase over the next 12 months.
- For light side forms, a balance of 14% anticipated an increase in sales in Q3 and 23% expected a rise over the next 12 months.
- 69% of heavy side firms and 74% of light side firms cited demand as the factor most likely to constrain activity over the next year.
- 13% of heavy side firms reported an increase in their labour force in Q2, the lowest balance since 2013 Q3.
- Raw materials costs rose according to 94% of heavy side manufacturers and 65% of those on the light side.
Download the full State of Trade Survey 2019 Q2.
ENDS
NOTE TO EDITORS:
Heavy side products are typically structural materials used early in the construction process and include materials used in transport and other civil engineering projects. Heavy side materials include: aggregates, cement, ready-mix concrete, structural and reinforcing steel. Light side products are typically installed later in the construction process and include internal fittings and services. Light side products include: heating and ventilation systems, plumbing, electrical and lighting, doors and windows, kitchen furniture and thermal insulation.
The Construction Products Association represents the UK’s manufacturers and distributors of construction products and materials. We are committed to raising the profile of our industry and members’ businesses, helping grow the market and reducing regulatory risk. The sector directly provides jobs for 337,000 people across 24,000 companies and has an annual turnover of more than £60.2 billion. The CPA is the leading voice to promote and campaign for this vital UK industry.
The CPA produces a range of economic reports including the quarterly Construction Industry Forecasts, Construction Trade Surveys and the State of Trade Surveys. All are available to members or subscribers via our website.
FOR FURTHER INFORMATION CONTACT:
Rebecca Larkin, CPA Senior Economist
Tel: 020 7323 3770
E-mail: rebecca.larkin@constructionproducts.org.uk
Matt McKeown, CPA Communications Executive
Tel: 020 7323 3770
E-mail: matt.mckeown@constructionproducts.org.uk
By Administrator at 25 Jul 2019, 09:48 AM