Heavyside materials producers predict slowing sales

Aaron Morby 4 weeks ago
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Building materials producers are bracing themselves for slowing sales in the months ahead as clients and householders think twice about projects amid rampant cost inflation.

The latest trade survey of members of the Construction Products Association found that nearly a third of heavyside producers expect sales to fall in the third quarter.

Looking further ahead over half of firms (56%) anticipated that sales would fall by up to 5% in the next 12 months, with only 22% expecting an increase.

Construction product/materials price inflation hit 27.2% in May, according to BEIS, with all product manufacturers reporting a rise in fuel costs in Q2, and wages and energy costs higher for the vast majority of firms.

In the latest state of trade report, the CPA warns that this inflationary backdrop is starting to impact on decision-making for construction projects as clients, particularly those negotiating fixed price contracts, as well as households considering RM&I work, grapple with rapidly rising project costs.

Rebecca Larkin, CPA Senior Economist said: “In recent quarters, construction product manufacturers have reported escalating inflationary pressures across fuel, energy, raw materials and wages. Added to this, there are early reports that higher costs further down the supply chain for transport, insurance, reverse charge VAT, and the removal of the red diesel rebate are starting to be reflected in lower confidence and delayed decision-making for new construction projects.”

She added: “Demand currently remains strong, particularly in the housing, RM&I, industrial and infrastructure sectors, but the headwinds related to costs are intensifying. Consumer price inflation is yet to peak too, which poses a downside risk if households and businesses rein in spending as disposable incomes and margins are eroded.”

 

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