The latest Construction Products Association (CPA) state of trade survey indicates that sales of construction products fell during the first three months.
CPA economist Milja Keijonen said: “The poor weather in January and March certainly had an adverse effect on sales in Q1, with sales of heavy-side products falling for the fourth consecutive quarter with 39% of firms reporting a fall in sales. Despite seeing a rise in light-side sales in Q4, volumes were once again lower, both on a quarterly basis and compared to a year ago.”
She added: “It is not all doom and gloom however, as both heavy- and light-side manufacturers anticipate a catch-up in sales in Q2 as improving weather conditions kick-start infrastructure and housing projects. Furthermore, a growth in sales is expected over the next 12 months. In addition, export sales continued to grow in Q1, with 15% of heavy- and 21% of light-side manufacturers reporting increased export volumes compared to Q4. Overall, 2013 is likely to be a challenging year for the industry but there are areas of optimism among the dark clouds.”
Both heavy- and light-side product manufacturers reported declines in activity, on balance. Some 39% of heavy-side manufacturers continued to report a decline in product sales quarter-on-quarter, on balance, following a balance of -13% recorded in Q4. Similarly, 8% of light-side firms reported a fall in sales, on balance, following strong performance in Q4. Product sales are expected to bounce back in Q2, following the weather affected Q1, with 29% of heavy-and 20% of light-side firms predicting a rise over the next quarter, on balance.
Production capacity remains significantly underused, with 52% of heavy-side firms stating that only 70% or less of their existing capacity was in use in the year to Q1, up from 43% in Q4 2012. Similarly, 39% of light-side manufacturers report underused capacity, up from 29% in Q4. Only 6% of heavy-and 9% of light-side firms report being at 90% capacity or better.
Export sales continued to grow in Q1 but the rate of growth slowed and falls in exports were more commonly reported than in Q4 2012. On balance, 21% of light and 15% of heavy-side firms reported export sales up on the previous quarter. Europe remains the key export destination for 67% of heavy firms and 64% of light-side companies, although the importance of Asia has increased and around a fifth of respondents cited it as their key export destination.
Employment continued to fall in the 12 months to Q1 with 3% of heavy- and 8% of light-side firms reducing headcount, on balance. 71% of heavy- and 46% of light-side companies stated that employment was stable compared to a year ago. The proportion of firms reporting falls in employment declined slightly compared to 2012 Q4 and 16% of heavy- and 31% of light-side companies reduced headcount in the year to Q1. The outlook for the next 12 months was mixed with heavy firms predicting no change, while 12% of light-side companies predicting a fall, on balance.
Heavy-side products are typically structural materials used early in the construction process and include materials used in transport and other civil engineering projects. Heavy-side materials include: aggregates, cement, ready-mix concrete, structural and reinforcing steel. Light-side products are typically installed later in the construction process and include internal fittings & services. Light side products include: heating & ventilation systems, plumbing, electrical & lighting, doors & windows, kitchen furniture and thermal.
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