The construction
products manufacturing sector ended 2018 with a stronger performance than it
started with, as manufacturers reported a broad increase in product sales and
continued optimism for the industry as it looks ahead to an uncertain 2019.
The Construction
Products Association’s State
of Trade Survey for 2018 Q4 reveals that product manufacturers reported
further increases in sales during the quarter, recovering from the
weather-related weakness seen at the beginning of 2018.
For heavy side
manufacturers, a balance of 27% of respondents reported that sales increased,
whilst on the light side, half of manufacturers also reported that sales rose,
marking the strongest increase of 2018.
Growth in factory
output is anticipated to rise further in the opening quarter of 2019, with 64%
of heavy side firms and 38% of those on the light side expecting an increase in
sales in the January-March period.
Although
manufacturers expect a positive outlook in 2019, cost pressures will likely
remain elevated.
Ninety per cent of
heavy side firms and 83% of those on the light side anticipate an increase in
costs in 2019, linked to labour shortages driving wages higher, and previous
Brexit-related currency fluctuations passing through into price rises for raw
materials and fuel.
Rebecca Larkin, CPA
Senior Economist said: “These results add further evidence that product
manufacturing entered 2019 on a strong footing, driven by increased
construction activity in the housing and infrastructure sectors. Reading
between the lines, given the elevated uncertainty over the government’s Brexit
strategy, manufacturers’ sales may have received a boost from precautionary,
near-term stockpiling further down the supply chain, and this is also likely to
have contributed to the optimism over what is an otherwise hazy outlook.
“Raw materials and
wage bills drove input inflation during Q4 and with a large proportion of
manufacturers anticipating further cost rises this year, political confirmation
of future trading conditions for materials and component imports will help in
dispersing some of the uncertainty currently clouding the supply chain’s
planning.”
Key survey findings
include:
- A balance of 27% of heavy
side firms and 50% of light side firms reported that construction product
sales rose in the fourth quarter of 2018 compared with the third quarter.
- On an annual basis, sales
also increased for 55% of heavy side and 21% of light side firms
- On balance, 64% of heavy side
manufacturers and 38% of light side manufacturers anticipated a rise in
sales in the next quarter
- Overall annual cost increases
were reported by 80% of manufacturers on the heavy side and 74% on the
light side
- Over the next year, 90% of
firms on the heavy side and 83% on the light side expect costs to rise
- Raw materials costs rose
according to 82% of heavy side manufacturers and 74% of those on the light
side
- Wages and salaries costs were
reported higher for a balance of 82% of heavy side firms and 94% on the
light side, a record high.
