More than two-thirds of all product manufacturers reported that costs rose in the fourth quarter of 2103 and more than 80% reported that costs would rise further in 2014.
The Construction Products Association’s latest state of trade survey, released today, indicates that sales of construction products rose in Q4 2013, driven by wider UK economic growth and key private construction sectors, together with strength in export markets. Product manufacturers are also anticipating further growth in sales, both domestically and abroad, over the next year.
In the survey, 82% of heavy side manufacturers and 86% of light side manufacturers reported rises in fuel costs during the final quarter of 2014. 76% of both heavy side and light side manufacturers suffered from a rise in energy costs. Wages & salaries and raw materials prices have also increased the pressure on manufacturing costs recently; 60% of heavy side firms and 71% of light side firms, on balance, reported in Q4 that wages and salaries rose over the past year, while 75% of heavy side firms and 57% of light side firms reported rises in raw materials prices over the same period.
In previous surveys, private housing was the key driver of domestic demand, but construction growth has spread to other sectors such as infrastructure and commercial, the largest construction sector.
Dr Noble Francis, economics director at the Construction Products Association, said: “Demand for exports picked up in the second half of 2013 and manufacturers anticipate exports rising further in 2014, primarily due to wider economic recovery in key export markets combined with the relatively low value of sterling.
“As a consequence, a rise in product sales during Q4 occurred for the majority of manufacturers, across both heavy and light side products.
“Importantly, manufacturers reported that, overall, capacity is not a significant issue and is unlikely to be during 2014 despite an expected rise in demand.
“Of concern, however, manufacturers reported margins continue to be severely hindered by cost rises, especially in energy and transport fuel. In addition, manufacturers also reported that labour costs and materials costs rose in the fourth quarter.”
Other key points include:
- 67% of both heavy and light side manufacturers reported that sales rose compared with Q3 2013
- 61% of heavy side manufacturers and 67% of light side manufacturers also reported that sales rose in Q4 2013 compared to Q4 2012
- For 2014 as a whole, 73% of heavy side manufacturers and 85% of light side manufacturers are anticipating a rise in sales
- 45% of heavy side manufacturers and 58% of light side manufacturers anticipated that exports would rise in 2014
- Over the next 12 months, 24% of heavy side and 25% of light side firms are anticipating that they will be operating at 90% capacity or above.
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