The construction
products manufacturing sector reported favourable results in the first quarter
of 2019, with continued growth in the sales of products and materials.
Despite the
environment of uncertainty relating to Brexit, manufacturers’ sales
expectations for the next 12 months remained optimistic.
The Construction
Products Association’s State of Trade Survey for 2019 Q1 reveals a balance of
46% of both heavy side and light side manufacturers experienced a rise in sales
during the quarter. Growth in product manufacturers’ output is anticipated to rise
further in the coming months, with 33% of heavy side firms and half of those on
the light side expecting an increase in sales in Q2.
A lack of clarity
over the political and economic situation may be holding back product
manufacturers’ capital investment, however. Only 8% of heavy side firms, on
balance, reported an annual increase in investment in structures and 17%
reported investment in plant and equipment was higher than a year ago. This
compares to five-year average balances of 21% and 54%, respectively.
Rebecca Larkin, CPA
Senior Economist said: “Recent construction data has painted a mixed picture of
the demand for manufacturers’ output, particularly in sectors where confidence
has been hit by Brexit-related uncertainty such as commercial offices, industrial
factories and high-end residential. Contrast this with almost half of product
manufacturers reporting increased sales in Q1, and the anecdotes of on-site
stockpiling further down the supply chain seem to be ringing true.
“Although the
uncertain climate may be helping manufacturers’ sales, the negative impact has
been on the sector’s capital investment. Heavy side firms have reported a
noticeable slowing in investment in new buildings and plant, and investment
intentions for the next year remain equally muted. With the risk of a No-Deal
Brexit and its damaging effect on construction activity still present, clarity
is urgently required.”
Key survey findings
include:
- A balance of 46% of both
heavy side and light side firms reported that construction product sales
rose in the first quarter of 2019 compared with the fourth quarter of
2018.
- On an annual basis, sales
also increased for 54% of heavy side and 29% of light side firms
- On balance, 33% of heavy side
manufacturers and 50% of light side manufacturers anticipated a rise in
sales in Q2
- Raw materials costs rose
according to 85% of heavy side manufacturers and 82% of those on the light
side
- On balance, 8% of heavy side
firms reported an annual increase in capital investment in structures in
Q1. 17% reported a rise in investment in plant and equipment.
- Over the next year, no heavy
side firms anticipate increasing investment in structures and one-third
anticipate investment in plant and equipment will increase.
