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Construction product manufacturers suffered a weak first quarter of 2018 due to Carillion’s liquidation and several days of snow and freezing temperatures.
Some 15% of heavy side manufacturers recorded a decline in sales in the first quarter of the year – the lowest balance in five years – according to the Construction Products Association’s (CPA) State of Trade Survey.
For light side manufacturers, no firms on balance reported an increase or a decrease, which was the weakest performance since the second quarter of 2013.
The CPA said the results, which are an early indicator of wider construction activity, signalled a “noticeable dip” in total industry output for Q1.
On an annual basis, sales decreased for 5% of heavy side firms but rose for 10% of firms on the light side, on balance
Manufacturers do anticipate a return to growth in the coming quarters but rising costs continue to act as a headwind, the CPA said.
On balance, 37% of heavy side manufacturers anticipated a rise in sales in the next year, increasing from a zero balance in the previous quarter.
On the light side, 16% of firms expected an increase in product sales in the next year, compared to a balance of 10% in 2017 Q4.
A total of 90% of heavy side manufacturers and 84% of those on the light side reported a rise in raw materials costs in Q1.
The same proportions also reported an increase in wages and salaries.
Rebecca Larkin, CPA senior economist said: “It was always unlikely that heavy side manufacturers would avoid the snow disruption, with aggregates quarries unable to operate and pauses in activities such as groundworks and bricklaying affecting demand for products and materials from construction sites.
“In addition, manufacturing capacity in this energy-intensive sector of the industry is likely to have been temporarily reduced by the National Grid’s gas deficit warning at the beginning of March.
“It appears from the forward-looking indicators that Q1 was just a weather-related blip, as 42% of heavy side manufacturers anticipate sales rising in Q2 and 37% see sales rising over the next 12 months.
“However, no light side manufacturers expect sales to increase in the next quarter and only 16% anticipate a rise over the course of the year, likely to reflect the lagged impact of any pauses in activity in Q1 on demand for these non-structural and finishing products that tend to be used nearer the end of the building process.”
