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Mixed Opener to 2024 for Product Manufacturing 

THE CONSTRUCTION Products Association’s latest State of Trade Survey for the first quarter of 2024 showed a mixed performance for product manufacturing.

A seventh consecutive quarterly fall in sales for heavy side firms contrasted with growth reported by firms on the light side. Manufacturers’ forward-looking expectations were the strongest in two years, but the strength of demand continues to be flagged as the largest concern.

In 2024 Q1, a balance of 36% of heavy side manufacturers reported that sales of construction products decreased, marking the seventh consecutive quarter of decline since 2022 Q3. Alongside this, 24% of light side manufacturers reported a rise in product sales, swinging back into growth after two previous quarters of decline.

Looking to the next 12 months, 79% of heavy side manufacturers and 59% of light side manufacturers anticipated an increase in sales, which were both the highest balances since the beginning of 2022. However, demand was cited by two-thirds of those on the heavy side and 59% of those on the light side as the factor most likely to constrain growth over the period.

Product Manufacturing 

In terms of cost inflation in Q1, whilst heavy side firms experienced a moderation in cost inflation, with only 9% of manufacturers reporting increased costs compared to the previous year, light side manufacturers reported a broad base of cost pressures, particularly from rising wages and salaries.

Rebecca Larkin, Senior Economist at the CPA

Rebecca Larkin, CPA Head of Construction Research said: “The split in manufacturers’ sales performance mirrors the dynamics of demand within construction at the start of the year. Notable weakness in house building, and fewer large home improvements projects and major commercial schemes held back heavy side sales, with the wet weather providing a further drag on demand. In contrast, buoyant areas of activity such as offices refurbishment and energy efficiency work continued unhindered, underpinning the strength in light side sales.

“There is a clear anticipation that a reduction in interest rates in the coming months will kickstart the housing market and shore up confidence for large commercial and industrial projects to proceed. Continued wariness over the strength of demand echoes broader macroeconomic forecasts that it may be a gradual recovery over the remainder of this year, however.”

Key survey findings include:

   A balance of 36% of heavy side firms reported that construction products sales fell in 2024 Q1 compared with 2023 Q4, the seventh straight quarter of decline
•    On balance, 24% of light side manufacturers reported an increase in sales, following two previous quarterly falls
•    79% of heavy side manufacturers and 59% of light side manufacturers anticipated a rise in sales over the next 12 months
•    67% heavy side manufacturers and 59% of light side manufacturers cited ‘demand’ as the key concern for sales over the next 12 months
•    All light side manufacturers reported an increase in wages and salaries compared to a year earlier

>> Read more about the CPA in the news

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