THE Construction Products Association’s latest State of Trade Survey – 2023 Q2 showed a continued split in performance in construction product manufacturing industry.

Heavy-side manufacturers’ sales decreased for a fourth consecutive quarter whereas sales from light-side producers registered another quarterly increase, adding to a run of growth that began in 2020 Q3. Forward-looking sales expectations suggest these varied fortunes will persist over the next 12 months.

In 2023 Q2, a balance of 47% of heavy-side manufacturers reported that sales of construction products decreased, marking the fourth consecutive quarter of decline and the weakest performance since 2020 Q2, mid-pandemic.

In contrast, 29% of light-side manufacturers reported that product sales rose, on balance. Light-side sales have now grown for three years.

Looking to the next 12 months, 14% of heavy-side manufacturers anticipated a fall in sales, while 46% of light-side manufacturers anticipated an increase. Encouragingly, the Q2 survey highlighted that cost inflation now appears to be abating, with the heavy-side and light-side recording the lowest net balances in three years.

There was a notable easing in energy costs, while fuel costs were reported to have fallen for heavy side producers that tend to be more energy intensive.

Rebecca Larkin, CPA head of construction research said: ‘The mixed fortunes for heavy-side and light- side sales growth perfectly illustrates the areas of strength and weakness that are appearing in construction right now.

Heavy-side sales have no doubt been hindered by the sharp slowdown in new housebuilding and hold-ups in starting large newbuild commercial and factories projects. Weak economic growth, two years of rapid cost inflation since projects were first given the go-ahead and uncertainty in the housing market following the Bank of England’s steep path of interest rate rises combine with the declines in new orders in these sectors at the start of the year to constrain demand for the heavy side products that are used for early and structural works.

‘Conversely, interior refurbishments of offices and retail, as well as public sector energy efficiency retrofit, are in full swing and are driving demand for light-side products.

‘In this quarter’s survey there were clear signs that input cost inflation is slowing, particularly in terms of fuel and energy costs, which should provide some relief for manufacturers who have experienced two years of elevated cost pressures on all fronts.

‘Tellingly, however, around two-thirds of producers – heavy-side and light-side – cited demand as the biggest potential constraint on activity this year, highlighting that economic uncertainty remains a dark cloud on the horizon.’
www.constructionproducts.org.uk