The Construction Products Association's (CPA) State of Trade Survey for 2018 Q2 reveals the £56 billion sector is catching up after a sluggish first three months of the year due to the adverse weather experienced across the UK.
With 40% of heavy side manufacturers reporting a rise in sale for Q2 on the back of two previous quarters of declining sales, 29% of light side firms (on balance) reported a fall in sales for the period. CPA said the decline reflects the lagged impact of the industry's decline in Q1, as light side products such as insulation, boilers, glass and lighting tend to be used at the end of the building process. On an annual basis, sales rose for 20% of heavy side firms and 12% of light side firms.
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Looking to the future, manufacturers are forecasting a return to growth with 43% of heavy side firms and 27% of those on the light side expecting an increase in sales over the next 12 months.
However, CPA said input cost inflation continues to persist, particularly for the energy-intensive heavy side, which is experiencing the pass-through of rising global commodity prices on fuel and energy costs.
Overall, construction product sales act as an early indicator of wider activity in the supply chain and these results signpost to a rise in total construction output levels over the next 12 months.
Rebecca Larkin, CPA Senior Economist, said: "These results fit the profile of construction catch-up from a weather-affected Q1. As we've moved from a freezing Spring to a hot Summer, groundworks and work on external structures has been able to resume, and this has been reflected in increased sales for heavy side manufacturers. The disruption in Q1 is likely to have delayed interiors and finishing works starting on site which is evident in the decline in light side sales during Q2.
"Manufacturers' product sales, capacity utilisation and new hiring are all still expected to increase over the next year, but price pressure is coming from all directions across fuel, energy, raw materials and labour, which is likely to be felt throughout the construction supply chain."
(LM/MH)
