CPA survey indicates construction product sales up in second quarter, UK

The Construction Products Association's (CPA) latest State of Trade Survey for the second quarter of 2015 indicates construction product manufacturers’ sales increased for a ninth consecutive quarter, driven by growth in all key areas of the UK construction market, together with a rise in export demand.

Key points include:
• A balance of 78 per cent of heavy side firms and 73 per cent of light side firms reported that sales rose during the second quarter of 2015, compared to a year earlier
• 78 per cent of heavy side product manufacturers and 50 per cent of light side product manufacturers reported that they anticipate a rise in sales over the coming year
• Exports increased for 20 per cent of heavy side firms and 40 per cent of light side firms
• 23 per cent of heavy side firms and 38 per cent of light side firms anticipate a rise in exports over the next year
• 33 per cent of heavy side firms reported capacity utilisation of over 90 per cent during Q2. 28 per cent of heavy side firms and 15 per cent of light side firms reported operating at over 90 per cent capacity over the last 12 months
• 89 per cent of heavy side firms and 47 per cent of light side firms increased employment in the year to Q2
• 72 per cent of heavy side firms and 50 per cent of light side firms anticipate increasing investment in plant and equipment over the next 12 months.

CPA economist, Rebecca Larkin, said: “The construction recovery has broadened beyond private house building to the commercial, industrial and infrastructure sectors, which has increased demand for construction products and led to a sustained period of growth among manufacturers. 

“78 per cent of heavy side firms and 73 per cent of light side firms reported a rise in sales in 2Q compared to a year earlier. In contrast to Q1, which saw a decline in export sales, domestic strength was also boosted by an increase in sales to overseas markets. Manufacturers anticipate that this dual source of rising demand will continue to drive sales over the next 12 months. Reinforcing optimism over the outlook and indicating that manufacturers anticipate a sustained increase in production, two-thirds of heavy side firms reported that investment in plant and equipment increased in 2Q compared to a year earlier and was cited as the primary area of investment for the next 12 months.

“The increase in demand has seen production increase and manufacturers have begun to absorb spare capacity, particularly on the heavy side, where a third of firms reported operating at over 90 per cent capacity in Q2. In turn, increased capacity utilisation has been reflected in manufacturers reporting higher costs.

“Wages and salaries were reported to be higher for 100 per cent of firms on the heavy side and 93 per cent on the light side in Q2, but firms have increased hiring despite the upside pressure on wage bills. 89 per cent of heavy side manufacturers and 47 per cent of those on the light side also increased headcount in 2Q.”