The Construction Products Association's latest State of Trade Survey indicates that, following a relatively good first quarter of the year, manufacturers suffered from a slowdown in sales in Q2 and are extremely concerned about demand going forward.
Senior economist Kelly Forrest said: "With public sector cutting spending and private sector construction adversely affected by events in the euro zone, it is unfortunately unsurprising to see product sales affected in Q2. Heavy side manufacturers reported that sales fell compared with Q1 and compared with a year ago. Sales of light side products, which tend to be used later in the construction process, continued to rise in Q2, yet the fall in heavy side sales suggests the second half of the year will become increasingly challenging. Nearly all of the firms responding to the survey expressed concern about the strength of demand over the next 12 months. It is their primary concern. Despite recent falls in oil and commodity prices, cost inflation continues to be a serious issue for product manufacturers. 84% of heavy side firms and 62% of light side firms reported that costs continued to rise as long term contracts have ensured that recent price falls have not fed through yet."
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Exports are still going strong and heavy side manufacturers are reducing headcount while light side firms are increasing the number of employees.
(NE/GK)
