The Construction Products Association’s latest State of Trade Survey indicates extreme concern about demand going forward particularly in the heavy side of the materials industry.
Association senior economist, Kelly Forrest said: “With public sector cutting spending and private sector construction adversely affected by events in the euro zone, it is unfortunately unsurprising to see product sales affected in Q2.
Heavy side manufacturers reported that sales fell compared with Q1 and compared with a year ago.
Sales of light side products, which tend to be used later in the construction process, continued to rise in the second quarter.
Nearly all of the firms responding to the survey expressed concern about the strength of demand over the next 12 months.
Forrest said: “Despite recent falls in oil and commodity prices, cost inflation continues to be a serious issue for product manufacturers.”
More than 80% of heavy side firms and 62% of light side firms reported that costs continued to rise as long term contracts have ensured that recent price falls have not fed through yet.
Manufacturers continued to be boosted by exports, with one in 10 heavy side manufacturers and a quarter of light side manufacturers reporting a rise in exports over the past year.
- 45% of heavy side firms said sales fell between Q1 and Q2 while 20% of light side firms reported rises
- 6% of heavy side manufacturers, on balance, reduced headcount in the year to Q2. 8% of light side firms, on balance, increased employment.
- 45% of heavy side manufacturers and 73% of light side manufacturers invested in product improvement.