Activity in the
construction products manufacturing sector was reported to have weakened in the
second quarter of 2019, 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 Q2 reveals that 6% of
heavy side manufacturers, on balance, reported a fall in sales compared to Q1.
Among light side manufacturers, a balance of only 9% reported that sales
increased. Survey balances for annual growth in product sales were also
markedly weaker for all manufacturers.
Looking forward to
the rest of the year, both heavy side and light side manufacturers reported
that they anticipate sales to increase, although for the heavy side, the
balance of 27% was the lowest in two years. In addition, heavy side hiring was
at a six-year low in Q2, suggesting the industry is adopting a cautious
approach as we enter a period with a new Prime Minister and rising uncertainty
over Brexit.
Rebecca Larkin, CPA
Senior Economist said: “It is difficult to pinpoint whether the weakness in
manufacturers’ sales in Q2 reflects merely an unwinding of the stockpiling by
construction firms that occurred in Q1, a more concerning slowdown in the
volumes of work on the ground, or a combination of both.
Nevertheless,
manufacturers have sounded a note of cautious optimism and anticipate that
sales will continue to grow over the next 12 months. However, over two-thirds
of firms highlighted demand as the key constraint on future activity and hiring
looks to have taken a back seat. Demand in the commercial, industrial factories
and housing RM&I sectors has already started the year on a loose footing,
meaning there’s a lot resting on the housing and infrastructure sectors to keep
construction activity afloat.”
Key survey findings
include:
- On balance, 6% of heavy side
product manufacturers reported that sales fell in the second quarter of
2019 compared with the first quarter. A balance of 9% of light side
manufacturers reported a rise in sales.
- On an annual basis, sales
increased for 20% of heavy side and 9% of light side firms.
- On balance, 20% of heavy side
manufacturers anticipated a rise in sales in Q3 and 27% expected sales to
increase over the next 12 months.
- For light side forms, a
balance of 14% anticipated an increase in sales in Q3 and 23% expected a
rise over the next 12 months.
- 69% of heavy side firms and
74% of light side firms cited demand as the factor most likely to
constrain activity over the next year.
- 13% of heavy side firms
reported an increase in their labour force in Q2, the lowest balance since
2013 Q3.
- Raw materials costs rose
according to 94% of heavy side manufacturers and 65% of those on the light
side.
