The CPA figures conflict with last month’s official ONS statistics for construction and confirm the doubt expressed by the association at the time.
Unseasonal mild and dry weather coupled to restocking and a favourable exchange rate has improved operating conditions for construction product manufacturers, especially when compared to the weather affected final quarter of last year, the CPA says.
The ONS figures indicated a 0.5% rise in GDP but a fall in construction output of 4.7% for the first quarter of 2011. Despite an overall growth in the economy the CPA expressed concerns over the suggested size of the fall in construction output as the industry has shown some signs of improvement since the start of the year.
Commenting on the figures, CPA economics director Noble Francis said: “The survey highlights that the situation for construction product manufacturers remained challenging in the first quarter of 2011 yet this is a considerable improvement on 2010 Q4 which suffered greatly from the impacts of the bad weather in November and December. 48% of manufacturers reported that sales of construction products rose in 2011 Q1, compared to just 14% in 2010 Q4. Yet the scale of the fall in the official figures is extremely surprising and inconsistent with information from this survey and anecdotal evidence from the industry.
“Looking forward, however, the outlook remains very uncertain and 79% of manufacturers stated that the strength of demand over the next 12 months will be their key constraint. Given that we are yet to see the full effect of the public spending cuts, in the near term we do not expect that private sector construction will be sufficiently strong to compensate for these cuts. As a result, the association’s latest construction forecasts anticipate that output in the industry will fall in 2011 and 2012 before it sees any significant growth in 2013.”
Other key points include:
- Annual cost inflation remained strong (at more than 5%, according to 42% of manufacturers)
- Growing confidence among manufacturers means that employment creation is likely over the next 12 months and 35% of manufacturers suggest headcount will rise
- 33% of manufacturers reported that exports rose in the year to March, by more than 5% according to 17% of exporting manufacturers
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