The Construction Products Association which represents the UK's manufacturers and suppliers of construction products, components and fittings, announced its latest State of Trade Survey on July 11. The survey indicates that, for many construction product manufacturers, export activity is of vital importance as the outlook in the UK remains uncertain.
In the second quarter of the current year, the total number of goods exporters in the construction sector increased 18 percent compared to the first quarter, leading to rising export volumes. In addition, construction product sales increased for the second consecutive quarter in 2011, aided by a competitive exchange rate. However, according to the firms in the sector and data reports, fuel, energy and raw material prices also increased during the last 12 months, while manufacturing input prices rose 17 percent over the past year. Furthermore, the association's survey suggests that costs are expected to increase further in the coming year. The survey also reports that 42 percent of heavy side firms and 44 percent of light side firms expect sales to rise over the next year but 71 percent of manufacturers expressed concern that domestic demand could constrain activity during the year.
Commenting on the figures, Construction Products Association senior economist Kelly Forrest said, "Whilst demand in the UK domestic market remains subdued, an increasing number of product manufacturers are turning to exports. These companies are quietly optimistic for the next 12 months. However, with consumer sentiment faltering at home and macroeconomic forecasts downgraded once again, there is enormous concern that domestic demand will decline as public spending is cut over the coming months."
Forrest also added that, although manufacturers were currently benefiting from a favourable exchange rate, there was great concern within the industry that this would be outweighed by the continual impact of rapidly rising costs.