The Construction Product Association’s latest ‘State of Trade’ Survey reports a thirteenth consecutive quarter of growth, but pessimism dominates the outlook.
The CPA reports continued growth in sales of construction products in the second quarter of 2016. Sales increased for a thirteenth consecutive quarter, but manufacturers displayed a growing pessimism about prospects for the coming year ahead, even though 75% of responses were received prior to the EU referendum.
Rebecca Larkin, CPA Senior Economist, said: “Construction product manufacturers’ sales growth strengthened in Q2, suggesting that construction activity remained resilient against a backdrop of growing uncertainty in the run-up to the EU referendum at the end of the quarter.
“Compared to the first quarter of 2016, a balance of 52% of heavy side firms reported a rise in sales in Q2. This was the highest balance in a year and increased from 31% in Q1. On the light side, 38% of firms reported a rise in quarterly sales in Q2, up from 13% in Q1.
However, pessimism prevailed in manufacturers’ views for the months ahead, even though the majority of responses came in before economic uncertainty intensified following the referendum result.
Larkin continued, “For heavy side manufacturers, sentiment was the lowest in three years and 13% of those firms anticipated a fall in sales in Q3. Among manufacturing firms on the light side, forward-looking sales expectations were the weakest since the financial crisis, with a downturn anticipated for the first time in six years.
“Sterling depreciated 8.4% against the Euro in Q2 compared to a year earlier, which may be one favourable side effect linked to the economic uncertainty pre- and post-referendum for product manufacturers that export to Europe. The majority (60%) of firms on both the heavy and light side anticipate an increase in overseas sales over the coming year.”