Recovery continues for construction product manufacturers
Construction product manufacturers reported a second quarterly increase in sales in the fourth quarter of 2020, according to the Construction Product Association’s (CPA) State of Trade Survey for 2020 Q4.
This reflects a catch-up in construction activity and pent-up demand in sectors such as housing as the industry continues its recovery from the Covid-related contraction in the first half of the year. Constraints related to material and component supply, however, as well as capacity and import concerns all registered more strongly than in recent surveys.
The CPA reports that 85% of heavy side manufacturers reported a rise in sales compared to Q3. Sales of light side products were reported to have increased by half of manufacturers. Product sales remained lower compared to a year earlier, however, mirroring ONS data that shows new build construction output is yet to fully recover above 2019 levels.
Reflecting expectations of a continued recovery path for construction and a government focus on keeping activity on site despite further periods of lockdown, both heavy side and light side manufacturers anticipated a rise in product sales in the near-term, on balance. Nevertheless, the strength of demand over the next year remained the largest concern for manufacturers, whilst international logistics bottlenecks and Covid-related labour concerns were also prominent.
Rebecca Larkin, CPA Senior Economist said: “The welcome recovery in construction continues to drive the improving performance in the closely-linked product manufacturing industry, but pinchpoints are starting to emerge. At the end of last year, around one-fifth of product manufacturers noted that issues around material and component supply risked constraining activity over the next 12 months.
:For the heavy side, this was the highest proportion on record and highlights the effect that global supply issues for imported products such as steel and timber, as well as maritime transport logistics, are having on UK manufacturing and construction. Given expectations of continued recovery in activity throughout 2021, concerns over capacity, particularly if large numbers of staff are required to isolate due to coronavirus, were also notable among manufacturers.”
Key survey findings include:
- 85% of heavy side firms and 50% of light side firms reported that construction products sales rose in Q4 compared with the previous quarter, both improving from balances recorded in Q3.
- On balance, 50% of heavy side manufacturers and 44% on the light side anticipated a rise in sales over the next 12 months.
- On the heavy side, 46% of firms cited demand as the factor most likely to constrain output over the next year. 47% of light side manufacturers cited this as their primary constraint.
- 23% of heavy side firms cited material/component supply as their primary constraint over the next year, marking the highest proportion since the survey began in 2008.
- 16% of light side firms cited material/component supply as their primary constraint over the next year.
- 12% of heavy side firms cited capacity as their primary constraint and 16% of light side firms cited imports.
Source: Show House News
