Construction products manufacturers' sales have increased for tenth quarter running

The Construction Product Association’s State of Trade Survey for the third quarter of 2015 indicates construction product manufacturers’ sales increased for a tenth consecutive quarter.

Although the news is not all positive as companies reported that growth was held back by weakness in exports, but manufacturers still continue to be optimistic over prospects for the next 12 months.

Key points include: 

• A balance of 27% of heavyside firms and 67% of lightside firms reported that sales rose during the third quarter of 2015, compared to a year earlier
• Exports decreased for 18% of heavyside firms and rose for 14% of lightside firms
• 64% of heavy side product manufacturers and 79% of light side product manufacturers reported that they anticipate a rise in total sales over the coming year
• 27% of heavy side firms and 36% of lightside firms anticipate a rise in exports over the next year
• 40% of heavyside firms and 33% of lightside firms reported operating at over 90% capacity over the last 12 months
• 77% of heavy side firms and 33% of lightside firms increased investment in plant and equipment in Q3
• 53% of heavyside firms and 33% of lightside firms anticipate increasing employment over the next 12 months

Rebecca Larkin, CPA Economist, said:  “We have now seen ten quarters of sustained growth reported by construction product manufacturers, led by demand from the private housing, industrial and infrastructure sectors.  

“On the downside, compared to a year earlier, 27% of heavyside firms and 67% of lightside firms reported a rise in sales in Q3.  These balances were lower than those reported in Q2 and the lowest for the heavy side firms since 2013 Q2.  This decline largely reflects a decrease in export sales experienced by heavy side manufacturers as Sterling has continued to appreciate against the Euro throughout late 2015; however, the fact that heavy side product sales occur at the beginning of the building process may also foretell a slowdown in domestic construction activity.

“Despite this, product manufacturers retain a positive outlook for the next 12 months.  Most survey respondents – 64% of heavy ide manufacturers and 79% of those on the lightside – anticipate that product sales will increase over the next year, with expectations of renewed growth in international sales combining with rising demand from the domestic market.

“As firms increase production, a growing proportion of manufacturers reported operating at 90% capacity or above in Q3.  In response, manufacturers reported increased investment in plant and equipment, as well as their labour force.  A further increase in investment and hiring intentions for the next 12 months signals widespread confidence over the longer-term outlook.” 

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