The construction
products manufacturing sector began to feel the impacts of the broader weakness
in economic growth and a diminishing pipeline of construction activity in Q3,
with heavy side manufacturers reporting a fall in sales and a slowdown in hiring
during the quarter.
The Construction
Products Association’s State
of Trade Survey for 2019 Q3 reports that 3% of heavy side manufacturers, on
balance, reported a fall in sales compared to Q2.
Sales of light side
products, typically used in the later stages of construction, were reported to
have increased by a balance of 54% of manufacturers, however.
Looking ahead,
manufacturers are signalling a cautious view for the next 12 months that
encompass Brexit and the rising likelihood of a general election. 11% of heavy
side firms anticipated a fall in sales for the year ahead, which was the
survey’s first negative reading in the forward-looking indicator in seven
years. This was combined with a subdued picture for hiring in Q3, in addition
to expectations that rises in headcount over the next year will be the lowest
since 2013.
Rebecca Larkin, CPA
Senior Economist said: “Third quarter performance was mixed across heavy side
and light side product manufacturers, which serves to illustrate the varying
fortunes across construction at the moment.
"The level of
construction work underway is currently relatively high, which is benefiting
light side product manufacturers feeding into large-scale city centre
regeneration underway, particularly in Birmingham and Manchester.
"However, the
fall in sales and forward-looking indicators for the heavy side, which is
typically linked to the early structural elements of a building, highlights the
upcoming gap in the pipeline of new construction orders and project starts,
notably in the residential and commercial sectors and in southern regions of
the country.”
Key survey findings
include:
- On balance, 3% of heavy side
product manufacturers reported that sales fell in the third quarter of
2019 compared with the second quarter. A balance of 54% of light side
manufacturers reported a rise in sales.
- On an annual basis, sales
decreased for 11% of heavy side firms but rose for 28% of light side
firms.
- On balance, 20% of heavy side
manufacturers anticipated a fall in sales in Q4 and 11% expected sales to
increase over the next 12 months.
- For light side firms, a
balance of 30% anticipated an increase in sales in Q4 and 31% expected a
rise over the next 12 months.
- Only 3% of heavy side firms
reported an increase in their labour force in Q3, the lowest balance since
2013 Q3.
- Demand was cited as the
factor most likely to constrain output over the next year, according to
60% of heavy side respondents and 56% of those on the light side.
