The recovery in construction product manufacturing continued in the first quarter of 2021, according to the Construction Product Association’s (CPA) State of Trade Survey. So far, the pick-up in construction activity has been led by private housing, infrastructure and the repair and maintenance sectors. Nevertheless, a constrained global supply of raw materials and components, as well as the associated increases in prices, is weighing on the outlook for the year ahead.
In the Q1 survey, 41% of heavy side manufacturers and 46% of light side manufacturers reported an increase in sales. Similar proportions reported an increase in annual terms, which points to activity rising above pre-coronavirus levels. In addition, both heavy side and light side manufacturers anticipated a rise in product sales over the next year, on balance. The government’s extensions of its job support schemes and housing market stimulus, plus activity on large-scale infrastructure projects, look to have underpinned confidence that the recovery will continue. The supply of raw materials and components now registers as the primary concern for product manufacturers, however, reflecting global supply issues for inputs such as steel, timber, PVC and chemicals.
Rebecca Larkin, CPA Senior Economist said: “The construction industry continues its V-shaped recovery, resulting in another quarter of increased sales for product manufacturers. This appears to be the case particularly in private housing, which is experiencing a flow of pent-up demand and policy support from Help to Buy and the stamp duty holiday. Infrastructure and the repair and maintenance sectors are also driving activity as work on major projects accelerates and homeowners and commercial occupiers re-assess their use of space. Encouragingly, manufacturers expect continued growth over the next year. This risks being held back by bottlenecks in the global supply of raw materials, however, notably in categories where a high proportion is dependent on imports. Inevitably, rises in input prices have followed and almost all manufacturers expect this inflationary pressure to persist over the next 12 months.”
Key survey findings include:
- 41% of heavy side firms and 46% of light side firms reported that construction products sales rose in 2021 Q1 compared with the previous quarter, marking the third consecutive quarter of growth.
- On balance, 53% of heavy side manufacturers and 71% on the light side anticipated a rise in sales over the next 12 months.
- On the heavy side, one-third of firms cited material/component supply as the factor most likely to constrain output over the next year. 40% of light side manufacturers cited this as their primary constraint.
- 90% of heavy side manufacturers reported an annual rise in the cost of raw materials in Q1.
- 88% of light side manufacturers reported an annual rise in the cost of raw materials in Q1.
Read the article online at: https://www.worldcement.com/europe-cis/21042021/cpas-state-of-trade-survey-suggests-encouraging-construction-industry-recovery/