Construction product manufacturers “optimistic” for year ahead

An eighth consecutive quarter of increasing sales has given construction product manufacturers reason to be optimistic with future growth anticipated, according to the Construction Products Association’s latest State of Trade Survey.

Construction product manufacturers 'optimistic' for year ahead

Future growth anticipated during Q2 and over the next 12 months is expected to be supported by domestic demand, exports and a reduction in fuel and energy costs, according to the CPA.

A balance of 50% of heavy side firms and 29% of light side firms reported that sales rose during the first quarter of 2015, compared to a year earlier, while 69% of heavy side product manufacturers and 57% of light side product manufacturers reported that they anticipate sales rising over the coming year.

Construction Products Association economist, Rebecca Larkin, said: “Product manufacturers opened 2015 with another positive quarter of sales growth, which underscores how the strength of the UK economy over the last 18 months has translated into increased activity in the construction sector.”

Some weakness in external demand has been noted, as the strong Sterling hindered exports to the Eurozone. However, growth in sales is still anticipated over the next 12 months underpinned by demand both at home and abroad.

She added: “Developments in the global economy have benefited firms on the cost side, however. Wages and salaries have been the key driver of cost inflation since 2014, but from the end of last year, this has been partly offset by the impact of lower oil prices, which averaged $64 per barrel in Q1. Registering the sharpest negative balance seen in the survey, fuel prices fell for 86% of heavy side manufacturers and 83% of light side firm in the period. Firms also reported falling energy and import costs, on balance.

“Encouragingly, product manufacturers appear keen to capitalise on this sustained period of activity and shore up demand in the longer-term. Priority areas for investment over the next 12 months, cited by more than two-thirds of firms, were product improvement, research and development and e-business.”

About Fiona Russell-Horne

Group Managing Editor across the BMJ portfolio.

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