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Product exports up as domestic construction market weakens

Building material manufacturers are seeing an increase in exports to off-set the subdued level of construction activity in the domestic market.
That’s according to the Construction Products Association’s latest State of Trade Survey.

Launched today (January16) this shows that 34% of light side and 17% of heavy side manufacturers increased overseas sales during the past year and a further 55% and 71%, respectively, maintained export levels in a competitive global marketplace.

Construction Products Association senior economist, Kelly Forrest said: “Against a difficult domestic backdrop, it is encouraging to see that exports are growing strongly, especially considering that export growth is a fundamental part of the government’s economic strategy.

“Future prospects for the UK industry, however, remain very uncertain, as cuts to public sector capital budgets impact on the ground and weak economic growth constrains the private sector recovery.

“Strong input cost inflation also added to the pressures on manufacturers as price increases in raw materials, energy and fuel all had a significant impact on manufacturing costs.

“Manufacturers of heavy side products, typically used in the early stages of the construction process, reported that conditions were challenging in Q4 but 2011, as a whole, was a better than anticipated year, due largely to publicly-financed work in progress feeding through more slowly than expected and strong growth in export activity. However, the cuts to public sector capital budgets are now having a tangible impact on the industry and demand from the eurozone, our largest trading partner, remains highly uncertain.’

The survey found that:

  • -22% of heavy side manufacturers, on balance, reported that sales fell in Q4 (compared with Q3) and 35% reported no change in activity

  • +22% of light side manufacturers reported sales growth in Q4

  • -3% of heavy side firms, on balance, expect sales in the next 12 months to fall, whereas +20% of light side foresee growth

  • 47% of light side and 82% of heavy side firms expect unit costs to increase in the next 12 months, largely due to further fuel and energy price inflation

  • 81% of light side manufacturers expressed concern about the strength of future demand

  • About Fiona Russell-Horne

    Group Managing Editor across the BMJ portfolio.

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