Construction product manufacturers expect strong sales to end year

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Construction product manufacturers are cautiously optimistic of a strong finish to 2018 after sales returned to “business as usual” in Q3, according to a new survey

The Construction Products Association’s latest State of Trade report shows that product sales, seen as an early indicator of wider activity in the UK construction supply chain, increased between July and September.

A balance of 27% of heavy side manufacturers reported higher sales in Q3. This was below the 40% that saw sales increase in Q2 on the back of hot weather, but was in line with the average survey balance for 2017.

On the light side, which includes insulation, boilers, glass and lighting, 27% of manufacturers reported higher sales, marking the first increase of 2018.

Some 18% of heavy side manufacturers and 43% of light side manufacturers expect sales to increase again in the fourth quarter.

Firms also reported that pressure on labour costs began to ease during Q3. Two-thirds of heavy side manufacturers reported an increase in wages and salaries, the lowest balance since the fourth quarter of 2013.

However, cost inflation for fuel and raw materials remained elevated thanks to the weakness of sterling and a global rise in oil prices since May.

Rebecca Larkin, senior economist at the Construction Products Association, said: “Given the unprecedented levels of economic uncertainty around Brexit and the weather-related distortions in the first half of the year, signs of a steady expansion in Q3 for construction product manufacturing and the building activity it delivers into are reassuring.

“Manufacturers remain cautiously optimistic and expect sales to increase in the fourth quarter, but it will be the political developments in Q4 that are crucial in setting the backdrop for this to become a reality.”

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