According to figures published in the UK’s Construction Products Association’s (CPA) latest State of Trade Survey, sales in the UK construction products manufacturing market continued to climb for a consecutive 15th quarter in Q4 of 2016.
About 78 percent of heavy side firms (steel, bricks, timber and concrete) reported that sales had increased in Q4, annually, while 75% of firms reported that sales were higher than a year earlier, which was the highest balance since Q3 of 2014.
However, due to the uncertainty and cost pressures from the fall in Sterling post-Referendum hit this year, the industry may struggle to experience similar growth in 2017, CPA said.
Among heavy side manufacturers, only 6 percent on balance anticipate a rise in sales during 2017 Q1, and 29 percent on balance of light side manufacturers anticipate a rise during the same period.
“Unsurprisingly, manufacturers’ expectations for 2017 appear to have been tempered by the uncertainty surrounding the economic and political outlook,” said Rebecca Larkin, CPA senior economist.
“Heavy side manufacturers appeared most exposed to the effects of Sterling’s depreciation during the second half of 2016.
“In Q4, two-thirds of firms reported an increase in costs, the highest in five years, and a further 89% anticipate an increase over the next year.
Rising costs of imported raw materials continue to be a primary driver of cost inflation, but there is now an indication that currency weakness is filtering through to higher energy and fuel costs too.
“The impact of Brexit on the construction industry is, as yet, unclear, but it is unlikely this year will be as buoyant as last unless government is able to provide greater certainty and the industry is able to manage cost pressures.”
Source: Timber Trade Journal