Exports prove lifeline for construction manufacturing

The Construction Products Association’s State of Trade Survey shows that export business is helping many manufacturers make-up for an uncertain UK economy.
The total number of manufacturers exporting goods increased by 18% in Quarter 2, compared to Quarter 1 meaning that construction products sales increased for the second consecutive quarter in 2011, helped by a competitive exchange rate.

However, there was growing concern over increasing cost pressures with 95% of firms reporting fuel, energy and raw material price inflation during the last 12 months. Furthermore the survey suggests that costs are expected to increase further in the coming year.

The survey found that:

  • 39% of light side manufacturers increased sales to overseas markets in Q2, with 21% of these firms raising sales by more than 5%

  • Exports of heavy side products rose at 23% of firms in Q2

  • Sales rose according to 61% of heavy side firms and 59% of light side firms in Q2 (year-on-year);

  • On balance, 42% of heavy side firms and 44% of light side firms expect sales to rise over the next year but 71% of manufacturers expressed concern that domestic demand could constrain activity during the year

  • Product improvement attracted greater investment during the past year, with 70% of light side firms and 67% of heavy side firms increasing their spend

    Commenting on the figures, CPA senior economist, Kelly Forrest said: “Whilst demand for the UK domestic market remains subdued, an increasing number of product manufacturers are turning to exports. These companies are quietly optimistic for the next 12 months. However, with consumer sentiment faltering at home and macroeconomic forecasts downgraded once again, there is enormous concern that domestic demand will decline as public spending is cut over the coming months.

    “Although manufacturers are currently benefiting from a favourable exchange rate, there is great concern within the industry that this will be outweighed by the continual impact of rapidly rising costs.”

  • About Fiona Russell-Horne

    Group Managing Editor across the BMJ portfolio.

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