Sales of construction products increased in the first quarter of 2016, marking the twelfth consecutive quarter of growth.
However, manufacturers’ optimism is showing signs of softening due to uncertainty surrounding the upcoming EU referendum in June.
These are the key finding of the latest state of trade survey from the Construction Product Association.
A balance of +31% of heavy side firms and +13% of light side firms reported that sales rose during the first quarter of 2016, compared to respective balances of +5% and +38% reported in the previous quarter.
The balance of firms reporting an annual increase in sales minus firms reporting a decrease was +38% for heavy side firms and +13% for light side firms. The heavy side balance strengthened from a balance of 29% reported in the fourth quarter of 2015, whereas the balance for light side manufacturers fell from +23% in 2015 Q4 and +67% in 2015 Q3. Looking ahead, +38% of heavy side manufacturers, net, and +29% of light side manufacturers anticipate an increase in sales in the next 12 months.
Drawing conclusions from the full survey findings, CPA senior economist Rebecca Larkin said: “It is encouraging that after a couple of quarters of muted activity, heavy side manufacturers reported stronger sales growth in Q1. Light side manufacturers opened 2016 a little weaker, but this is likely to be a hangover as the slowdown reported by the heavy side at the end of last year filters through to light side activity – typically towards the end of the building process.
“Compared to the fourth quarter of 2015, a balance of 31% of heavy side firms reported a rise in sales in Q1. This increased from 13% in Q3 and 5% in Q4. On the light side, 13% of firms reported a rise in Q1 quarterly sales, down from 38% in Q4.
“Manufacturers’ optimism for Q2 and for the next 12 months has been dented by uncertainty in the run-up to the EU referendum in June. On balance, 38% of heavy side firms and 29% of those on the light side anticipate a rise in sales in Q2. These balances mark the lowest sentiment in three years and signpost a slowdown in growth as we approach the vote.
“One favourable side effect of the referendum uncertainty has been the depreciation in Sterling, which has resulted in increased exports for product manufacturers. On the heavy side, 71% of manufacturers anticipate an increase in export sales over the year, a view shared by 60% of light side firms. This will provide a welcome fillip if domestic demand pauses as manufacturers expect.”
This article was published on 8 Apr 2016 (last updated on 8 Apr 2016).