The construction products manufacturing sector expanded for a fifth consecutive quarter in Q3 2021 despite material price issues and ongoing supply problems exacerbated by the HGV driver shortage, according to the latest Construction Products Association’s (CPA) State of Trade Survey.
In Q3, a balance of 44% of heavy side manufacturers reported that sales had increased compared to Q2, whilst a much lower 26% of light side manufacturers reported an increase.
However, both balances fell from those recorded in the previous quarter. Given a strong pipeline of new work in private housing, private housing repair, maintenance and improvement (RMI) and infrastructure, 56% of heavy side and 64% of light side manufacturers anticipate further sales growth over the next 12 months.
The data also showed that cost pressures intensified and broadened from raw materials to fuel, energy and wages and salaries, due to the recent rise in global gas, electricity and crude oil prices, with 93% of heavy side manufacturers reporting an annual rise in energy costs, the highest balance in four years. Meanwhile, 89% of light side manufacturers reported an annual increase in energy costs, the highest balance in nine years.
However, the strength of demand for construction products and materials led to capacity utilisation also increasing in the year to Q3, particularly on the heavy side.
Commenting on the findings, Amandeep Bahra, CPA Economist, said: “Despite challenging trading conditions stemming from COVID and Brexit, construction product manufacturers achieved a fifth consecutive quarterly rise in product sales in Q3. More encouragingly, manufacturers remained optimistic about sales growth over the next 12 months.
“However, the recent surge in global energy and commodity prices have pushed up energy and fuel costs for manufacturers. All firms surveyed reported an annual increase in fuel costs, whilst the balance citing higher energy costs hit a four-year high for energy-intensive heavy side manufacturers and a nine-year high for light side manufacturers.
“This comes as raw materials and wages and salaries continue to put upward pressure on input costs and with a record high proportion of heavy side firms operating at over 90% capacity, cost pressures are unlikely to abate any time soon, especially, as the full impact of rising energy prices is yet to be felt.”
>>Read more about how shortages and prices are impacting the industry here.
