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Construction product sales stabilise

Despite January's adverse weather conditions, construction product sales were flat during the first quarter of 2010 compared with the year earlier, according to the Construction Activity Barometer.
Product manufacturers are anticipating growth in sales in the second quarter of 2010 say the Construction Products Association.

In the barometer, a figure of 50 represents no change in sales compared with a year earlier with below 50 representing a fall in sales. This quarter's overall result of 51 indicates conditions for product manufacturers have stabilised. However, within this there is a clear difference between the fortunes of heavy and light side manufacturers.

Heavy side manufacturers were acutely affected by the adverse weather conditions earlier this year and experienced a further decline in sales with a balance of 48, although this is the most positive result in more than two years.

Light side manufacturers saw a significant rise in sales with a balance of 57, up from 25 compared with the last quarter, which is the first positive result since the first half of 2008.

Both heavy and light side manufacturers envisage a rise in sales during the next quarter with respective balances of 56 and 59.

'This latest survey reflects improved conditions for the construction products industry and can be partly attributed to the fiscal stimulus from government during the recession,' said Noble Francis, economics director for the Construction Products Association.

'Looking forward, the rest of 2010 and 2011 are likely to remain extremely challenging for the industry given the threat of sharp cuts in public capital spending. Although there is a clear need to reduce the public deficit, government must ensure it maintains investment in those areas such as transport, energy, housing and education which are most likely to encourage economic recovery and provide the basis for long term sustainable growth,' he added.

'Although the upcoming election and uncertainty of future public infrastructure spending are still making forward planning difficult, it is encouraging to see manufacturers at least consider that sales volumes are stable,' said Dominic McAra, a director in the Ernst & Young's Construction Products team.

'We have seen a number of companies in the sector have addressed their cost base during the last year to reflect lower sales volumes and are therefore better placed to cope with these lower volumes than this time last year.
1 April 2010

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