The Construction Products Association (CPA)'s State of Trade Survey for 2017 Q3 reveals 10% of heavy side manufacturers reported an increase in sales during the third quarter, down from 40% reporting a rise in Q2. On the light side, 36% of product manufacturers reported higher sales, declining from a balance of 55% in Q2. Overall, cost increases were reported by 90% of manufacturers on the heavy side and the light side.
The slowdown is being attributed to rising costs for raw materials, fuel and energy, as well as a slowing construction output. Raw materials costs rose according to 85% of heavy side manufacturers and 100% of those on the light side.
With manufacturers expectations for product sales lowered in Q4, on balance no firms on the light side anticipate an increase in sales during the October to December period, whilst 21% of heavy side firms expect sales to decline.
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However for the year ahead, 28% of heavy side firms anticipate an increase in product sales, whilst on the light side, 33% of firms expect sales to increase. Despite this, 78% of heavy side manufacturers and 67% of light side manufacturers anticipate a rise in costs over the next year/.
Rebecca Larkin, CPA Senior Economist 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."
The construction products manufacturing industry has an annual turnover of £55 billion, directly providing jobs for 300,000 people across 22,000 companies. Products range from 'heavy side' materials such as steel, bricks, timber and concrete to 'light side' products such as insulation, boilers, glass and lighting.
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