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Product sales fall for first time in two years

Ready-mixed concrete

Two-year run of construction products sales growth ends as deteriorating economic backdrop bites

THE two-year run of sales growth for construction product manufacturers ended in the third quarter (Q3), according to the Construction Products Association’s latest State of Trade Survey.

Furthermore, a slowdown in construction activity in the publicly financed and repair and maintenance sectors since summer, as well as the deteriorating economic backdrop, underpin manufacturers’ expectations of a contraction for the year ahead.

In Q3, 12% of heavy-side manufacturers reported that sales of construction products declined, ending eight months of growth and marking the first fall since the nationwide lockdowns in the second quarter of 2020.

Demand was viewed as the key constraint on manufacturers’ activity going forward, with 53% of heavy-side firms, whose products tend to feed into the earlier stages of construction, anticipating a decrease in sales over the next 12 months.

Rebecca Larkin, senior economist at the CPA, said: ‘The easing in manufacturers’ sales and the emerging weakness in construction output in Q3 is now joined by broader deterioration in the UK economy. High inflation continues to erode household finances and take big chunks out of project budgets, at a time when markets have reacted badly to the new Chancellor’s early fiscal plans and knocked confidence and growth prospects even further.

‘With a recession on the cards for 2023, it should come as no surprise that construction product manufacturers are anticipating a contraction in sales and activity. This combines with the strong rates of input cost inflation that already pervade the supply chain and have begun to delay decision-making on construction projects.

‘Hopefully, some of the unanswered questions around the Government’s spending plans will be resolved in the coming months and help to lift the cloud of uncertainty hanging over our industry.’

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