Mixed fortunes for products sector

Construction output growth has slowed sharply since the start of 2003, the latest Construction Products Association's Trade Survey published today (Thursday) has shown.

The survey reveals that product manufacturers' expectations for the third quarter are somewhat mixed with three-quarters of light side firms anticipating a further rise in sales volumes, but just a quarter of heavy side firms expecting sales to rise.

Commenting on the survey, Allan Wilén, economics director, said: "While construction product sales rose during the second quarter, with on balance over half of surveyed firms reporting an improvement on the previous three months, the year on year improvement has been more modest, with only a quarter of firms on the heavy side reporting higher sales volumes. 

"The slowdown in sales growth has resulted from a weakening in private sector construction activity, at a time when the industry remains concerned by the slow pace at which promised government investment is feeding through to work on site. 

"Recent events have shown that the nation's infrastructure is urgently in need of improvement and Government must move to fast track projects, such as the road improvement schemes identified in the multi-modal studies, in order to ensure the prompt delivery of this much needed investment," he said. 

Other key findings of the Survey show:

• Over half of all light side firms reported increases in exports sales volumes of more than 5% during the quarter, compared to just 17% of heavy side firms.
  
• One third of firms reported that imports accounted for more than 15% of the domestic market for their particular products, with half of both heavy and light side firms expecting import market share to increase.
  
• With higher raw material prices and rising wages, on balance, around 60% of firms have seen their unit costs rise over the last year.
  
• Price increases have been generally modest with only 7% of firms reporting increases in excess of 5%
  
• Capital expenditure continued to rise over the last year with, on balance, a third of both heavy and light side firms increasing their investment in product improvement (56% of heavy side firms), plant and equipment (47% of light side firms), and customer research.