Dismal outlook as manufacturers expect recession
Two years of sales growth for construction product manufacturers ended in the third quarter of 2022 on the back of slowing demand for repair and maintenance.
The latest figures from the Construction Product Association鈥檚 state of trade survey showed 12% of heavy-side manufacturers reporting a decline in sales in Q3, the first fall since the second quarter of 2020, when nationwide lockdowns were introduced because of the covid-19 pandemic.
The 17% of light-side manufacturers reporting a rise in sales was also the lowest balance in two years, with 96% of these firms reporting a rise in fuel cost.
Economic headwinds are expected to continue, too 鈥� 82% of heavy-side firms and 61% of light-side firms expect overall costs to increase over the next year, with 53% of the former and 13% of the latter anticipating a decline in sales over the same period.
Rebecca Larkin, senior economist at the CPA, said the weakening economic indicators in construction were 鈥渏oined by broader deterioration in the UK economy鈥� with high inflation eroding household finances and project budgets.
She added that that sacked chancellor Kwasi Kwarteng鈥檚 early fiscal plans had 鈥渒nocked confidence and growth prospects even further鈥� and said that manufacturers鈥� anticipation of a contraction in sales was 鈥渘o surprise鈥� given that many are expecting a recession in the new year.
鈥淭his 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,鈥� she said.
鈥淗opefully some of the unanswered questions around the government鈥檚 spending plans will be resolved in the coming months and help to lift the cloud of uncertainty hanging over our industry.鈥�
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