Home News Construction product sales continue to strengthen in Q3

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The Construction Products Association’s latest State of Trade Survey released today indicates that sales of construction products continued to strengthen during the third quarter of 2013 following the recovery in Q2.  Private housing and infrastructure were still the key drivers behind growth but building product manufacturers clearly signalled that the rise in sales was more widespread than in Q2.

Construction Products Association economist Milja Keijonen commented:  “The third quarter of 2013 saw sales significantly rise across the board.  Exports supported the growth but even the domestic market showed signs of recovery.  Heavy side products, commonly utilised early in construction projects, recorded widespread growth in sales both on an annual basis and quarter-on-quarter.  Sales of light side products such as fittings and services also increased strongly after a broadly flat Q2.

“Looking ahead, product manufacturers are increasingly optimistic about Q4 sales growth and most are expecting higher sales over the next 12 months.  The wider economic outlook has steadily become more positive, which should support recovery in construction and demand for building products.  We note that employment for product manufacturers is still flat, though sentiment is increasingly positive.

“Altogether, the results highlight the improving state of the market; however, concerns do remain about the sustainability of the recovery with most manufacturers reporting that domestic demand could prove to be a future constraint.”

Cost inflation is being driven by energy and fuel costs but wages and salaries are putting increasing pressure on costs. Energy intensive users say that  energy costs have a significant impact on unit costs. Labour costs were the most significant driver of costs among light side firms with 71% of firms singling out wages and salaries as the key contributor towards cost, on balance.

Other key points include:

  • Trading conditions among light side producers improved significantly and around 60% of companies, on balance, experienced a rise in sales from a year ago and quarter-on-quarter.
  • Expectations suggest that conditions are set to improve further over the next three months with 67% of heavy and 66% of light side companies, on balance, expecting sales to rise in Q4.
  • Exports continued to boost sales in Q3 with 27% of light and 25% of heavy side firms reporting a rise in exports quarter-on-quarter, on balance.
  • Cost inflation was widespread across the industry with energy and transport costs driving higher unit costs.