UK construction manufacturing continues to grow

Published:  10 January, 2017

Sales in the UK construction products manufacturing market continued to climb for a fifteenth consecutive quarter in Q4 of 2016, according to figures published in the Construction Products Association's (CPA) latest State of Trade Survey.

The construction products manufacturing industry has an annual turnover of £55bn, directly providing jobs for 288,000 people across 22,000 companies. Products range from heavyside materials such as steel, bricks, timber and concrete, to lightside products such as insulation, boilers, glass and lighting.

On an annual basis, 78% of heavyside firms reported that sales had increased in Q4, while on the lightside, 75% of firms reported that sales were higher than a year earlier, which was the highest balance since 2014 Q3.

However, as uncertainty intensifies and cost pressures from the fall in Sterling post-Referendum hit this year, the CPA believes the industry may struggle to experience similar growth. Among heavyside manufacturers, only six percent on balance anticipate a rise in sales over Q1 2017, with 29% on balance of lightside manufacturers anticipate a rise during the same period.

Rebecca Larkin, CPA senior economist, said: "Construction product manufacturers ended 2016 on a strong note, with half of manufacturers on both the heavyside and lightside reporting an increase in sales in Q4, marking not only a fifteenth consecutive quarter of growth, but also the highest balances for the year.

"Unsurprisingly, manufacturers' expectations for 2017 appear to have been tempered by the uncertainty surrounding the economic and political outlook. Heavyside manufacturers appeared most exposed to the effects of Sterling's depreciation during the second half of 2016. In Q4, two-thirds of firms reported an increase in costs, the highest in five years, and a further 89% anticipate an increase over the next year. Rising costs of imported raw materials continue to be a primary driver of cost inflation, but there is now an indication that currency weakness is filtering through to higher energy and fuel costs too.

"The impact of Brexit on the construction industry is, as yet, unclear, but it is unlikely this year will be as buoyant as last unless government is able to provide greater certainty and the industry is able to manage cost pressures."

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