Following the easing of COVID-19 (coronavirus) lockdown restrictions and the subsequent reopening of construction sites and supply chains, construction product manufacturers reported a rebound in the third quarter of 2020, pointing to early signs of a V-shaped recovery.
The Construction Products Association’s State of Trade Survey for 2020 Q3 reports that one-third of heavy side manufacturers reported a rise in sales compared to Q2. Sales of light side products were reported to have increased by 48% of manufacturers. Mirroring ONS data on construction output during the quarter, product sales remained lower compared to a year earlier.
It was a more mixed picture for manufacturers’ forward-looking expectations, however. Both heavy side and light side manufacturers expect the recovery to intensify in Q4, with 56% of all firms anticipating a rise in sales in the next quarter, on balance. However, when looking to the next 12 months, 24% of heavy side anticipated a fall in sales, contrasting with 21% of light side manufacturers anticipating a rise. Reflecting the uncertainty over the outlook for construction in 2021, negative balances remain for manufacturers’ investment intentions in new structures, plant and machinery, whilst adjustments to newer working practices mean that investment in e-business remains a priority.
Rebecca Larkin, CPA Senior Economist said: “Despite the welcome news of a pickup in activity, the Q3 survey captures the uncertainty over the recovery path for the economy and construction next year. There are already clear signs of differences in the outlook by sector, with house building subject to volatility as the stamp duty holiday ends and employment backdrop worsens, infrastructure benefiting from new and ongoing major projects, and commercial facing near-term unknowns over demand for office and retail space depending on how embedded homeworking becomes in future. The uncertainty is proving to be a catalyst for manufacturers to prepare for how new ways of working may change supply chain distribution, notably through increasing investment in developing e-commerce.”
Key survey findings include:
- 33% of heavy side firms and 48% of light side firms reported that construction products sales rose in Q3 compared with the previous quarter, improving from the weakest balances in nearly 12 years.
- On balance, 56% of both heavy side and light side manufacturers anticipated a rise in sales over the next three months.
- Half of heavy side firms anticipated a decline sales over the next 12 months, according to a balance of 24%
- 21% of light side manufacturers anticipated sales increasing over the next year
- On the heavy side, 6% of firms expected to reduce investment in structures over the next 12 months, and 24% expected to reduce investment in plant/equipment.
- 65% of heavy side firms and 43% of light side firms, on balance, also anticipated increased investment in e-business over the next year.
ENDS
NOTE TO EDITORS:
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 and services. Light side products include: heating and ventilation systems, plumbing, electrical and lighting, doors and windows, kitchen furniture and thermal insulation.
The Construction Products Association is the leading organisation that represents and champions construction product manufacturers and suppliers. This vital UK industry defines our built environment, providing the products and materials needed for homes, offices, shops, roads, railways, schools and hospitals. Our industry directly provides jobs for 373,000 people across 24,000 companies and has an annual turnover of £61 billion.
The CPA produces a range of economic reports that provide our members, policy-makers and wider industry with a detailed understanding of the construction market to facilitate planning and business development. Members of the Association are entitled to receive these insights at no additional cost. Non-members can make one of purchases or subscribe for a full information package.
FOR FURTHER INFORMATION CONTACT:
Rebecca Larkin, CPA Senior Economist
Tel: 020 7323 3770
E-mail: rebecca.larkin@constructionproducts.org.uk
Matt McKeown, CPA Senior Communications Executive
Tel: 020 7323 3770
E-mail: matt.mckeown@constructionproducts.org.uk