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Construction manufacturers anticipate production rise

The construction products manufacturing sector ended 2018 with a stronger performance than it started with, as manufacturers reported a broad increase in product sales and continued optimism for the industry as it looks ahead to an uncertain 2019.

The Construction Products Association’s State of Trade Survey for 2018 Q4 reveals that product manufacturers reported further increases in sales during the quarter, recovering from the weather-related weakness seen at the beginning of 2018.

For heavy side manufacturers, a balance of 27 per cent of respondents reported that sales increased, while on the light side, half of manufacturers also reported that sales rose, marking the strongest increase of 2018. 

Growth in factory output is anticipated to rise further in the opening quarter of 2019, with 64 per cent of heavy side firms and 38 per cent of those on the light side expecting an increase in sales in the January-March period.

Although manufacturers expect a positive outlook in 2019, cost pressures will likely remain elevated. 90 per cent of heavy side firms and 83 per cent of those on the light side anticipate an increase in costs in 2019, linked to labour shortages driving wages higher, and previous Brexit-related currency fluctuations passing through into price rises for raw materials and fuel.

Rebecca Larkin, CPA senior economist, said: “These results add further evidence that product manufacturing entered 2019 on a strong footing, driven by increased construction activity in the housing and infrastructure sectors. Reading between the lines, given the elevated uncertainty over the government’s Brexit strategy, manufacturers’ sales may have received a boost from precautionary, near-term stockpiling further down the supply chain, and this is also likely to have contributed to the optimism over what is an otherwise hazy outlook.

“Raw materials and wage bills drove input inflation during Q4 and with a large proportion of manufacturers anticipating further cost rises this year, political confirmation of future trading conditions for materials and component imports will help in dispersing some of the uncertainty currently clouding the supply chain’s planning.”

30 January 2019

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