Construction product sales fall for first time in two years

Sales of “heavy” construction materials fell during the third quarter of this year after an unbroken two years of growth, with the situation set to get worse.

The Construction Products Association’s latest State of Trade Survey showed a negative balance of 12% in the number of firms reporting a fall in sales or an increase between July and September 2022.

The last time the figure for heavy materials (those used early in the construction process such as concrete, steel and aggregates) was in negative territory was during the second quarter of 2020.

The figure for “light” construction materials (such as internal fittings) was positive, but at 17% was also at its lowest level since the second quarter of 2020.

CPA senior economist Rebecca Larkin said: “The easing in manufacturers’ sales and the emerging weakness in construction output in Q3 is now joined by broader deterioration in the UK economy.”

Meanwhile, on balance, 53% of heavy side firms anticipate a decrease in sales over the next 12 months.

Of companies in the light side of the products market, a balance of 13% of firms anticipated a decline.

Larkin said: “With a recession on the cards for 2023, it should come as no surprise that construction product manufacturers are anticipating a contraction in sales and activity.

“This combines with the strong rates of input cost inflation that already pervade the supply chain and have begun to delay decision-making on construction projects.”

However, she added that a clearer picture of the UK government’s spending plans could help lift the economic gloom.

Weakness in hiring intentions was reported by both heavy side and light side manufacturers.

The figures relating to cost inflation showed some improvement.

While 88% of heavy and 83% of light manufacturers reported cost increases during the past quarter, this was down from 100% for the first time in a year.

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