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Construction products sales grow in Q4 but cost rises are key constraint

The Construction Products Association’s latest State of Trade Survey released today indicates that sales of construction products rose in Q4, driven by wider UK economic growth and key private construction sectors, together with strength in export markets. 

Product manufacturers are also anticipating further growth in sales, both domestically and abroad, over the next year.

Construction Products Association economics director Noble Francis said: “In previous surveys, private housing was the key driver of domestic demand; however, Q4 has seen construction growth spread to other key sectors such as private commercial, the largest construction sector, and infrastructure. 

“Demand for exports picked up in the second half of 2013 and manufacturers anticipate exports rising further in 2014, primarily due to wider economic recovery in key export markets combined with the relatively low value of sterling.

“As a consequence, a rise in product sales during Q4 occurred for the majority of manufacturers, across both heavy and light side products.

“Importantly, manufacturers reported that, overall, capacity is not a significant issue and is unlikely to be during 2014 despite an expected rise in demand.

“Of concern, however, manufacturers reported margins continue to be severely hindered by cost rises, especially in energy and transport fuel.  In addition, manufacturers also reported that labour costs and materials costs rose in the fourth quarter.”

 

Other key points include:

  • 67 per cent of both heavy and light side manufacturers reported that sales rose compared with the third quarter.
  • 61 per cent of heavy side manufacturers and 67 per cent of light side manufacturers also reported that sales rose in Q4 compared to one year earlier.
  • For 2014 as a whole, 73 per cent of heavy side manufacturers and 85 per cent of light side manufacturers are anticipating a rise in sales.
  • 45 per cent of heavy side manufacturers and 58 per cent of light side manufacturers anticipated that exports would rise in 2014.
  • Over the next 12 months, 24 per cent of heavy side and 25 per cent of light side firms are anticipating that they will be operating at 90 per cent capacity or above.
  • 82 per cent of heavy side manufacturers and 86 per cent of light side manufacturers reported rises in fuel costs.
  • 76 per cent of both heavy side and light side manufacturers suffered from a rise in energy costs.

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