Construction products market grows for the fifteenth consecutive quarter

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Sales in the UK construction products market have grown for the fifteenth consecutive month according to new figures published

The Construction Products Association’s (CPA) latest State of Trade Survey has revealed another quarter of growth for the sector, continuing the trend seen over the past 15 quarters.

According to the figures, quarter four of 2016 saw 78 per cent of heavy side firm report an increase in sales during this period. The light side saw 75 per cent of firms report sales were higher than a year earlier. This represented the highest balance since the third quarter of 2014.

Brexit impact starting to be felt

While the news is undoubtedly good, the association urged caution, warning that a fall in sterling post-referendum is beginning to be felt. The CPA said the industry may not reach a similar growth going forward. This was reflected in the survey.

Only six per cent of heavy side manufactures said, on balance, that they expect to see an increase in sales during Q1 2017. The figure for light side manufacturers was a little better, with 29 per cent anticipating growth.

Uncertainty for the year ahead

The CPA’s senior economist Rebecca Larkin said: “Construction product manufacturers ended 2016 on a strong note, with half of manufacturers on both the heavy and light side reporting an increase in sales in Q4, marking not only a fifteenth consecutive quarter of growth, but also the highest balances for the year.

“Unsurprisingly, manufacturers’ expectations for 2017 appear to have been tempered by the uncertainty surrounding the economic and political outlook. Heavy side manufacturers appeared most exposed to the effects of Sterling’s depreciation during the second half of 2016.

“In Q4, two-thirds of firms reported an increase in costs, the highest in five years, and a further 89% anticipate an increase over the next year.

“Rising costs of imported raw materials continue to be a primary driver of cost inflation, but there is now an indication that currency weakness is filtering through to higher energy and fuel costs too.”

Larkin added: “The impact of Brexit on the construction industry is, as yet, unclear, but it is unlikely this year will be as buoyant as the last unless government is able to provide greater certainty and the industry is able to manage cost pressures.”

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