UK construction products sales set for slowdown
Sales of construction products slowed in the fourth quarter of 2017 and a further slowdown is expected in 2018, according to the latest state of trade survey by the UK’s Construction Products Association (CPA).
The survey results showed that a balance of 6% of heavy side manufacturers, such as steel, bricks, timber and concrete, reported a decrease in product sales in the fourth quarter, compared to 10% reporting a rise in the third quarter. This was the first negative balance since the first quarter of 2013.
In contrast, sales on the light side, which includes non-structural and finishing products such as insulation, boilers, glass and lighting, were still reported to be higher by half of manufacturing firms.
While a modest pickup in sales is expected in the first quarter of 2018, the survey showed a weakness in sales expectations extending across the next 12 months, for both heavy side and light side firms. No heavy side firms, and only 10% of those on the light side, expected an increase in product sales during 2018.
Rebecca Larkin, CPA senior economist, said: “The survey echoes other industry data that has shown the prolonged period of growth in construction activity since 2013 started to lose pace in the closing months of 2017.
“Of note are the signals of a leaner 2018 with heavy side expectations for sales growth at their lowest in five years, reflecting a backdrop of a slower economy, Brexit uncertainty and falling new orders in key sectors such as commercial offices.”
Larkin added: “As well as weaker market conditions, it appears as though a further rise in costs will strengthen the headwinds facing industry. In Q4, 87% of heavy side firms and 91% of light side firms reported a rise in raw materials costs, whilst on the energy-intensive heavy side, fuel and energy costs were reported higher for 93% of firms.”