Construction Product Manufacturers Report Rebound in Q3

FOLLOWING THE EASING of the pandemic lockdown restrictions and the subsequent reopening of construction sites and supply chains, construction product manufacturers reported a rebound in the third quarter of 2020, pointing to early signs of a V-shaped recovery.

The Construction Products Association’s State of Trade Survey for 2020 Q3 reports that one-third of heavy side manufacturers reported a rise in sales compared to Q2. Sales of light side products were reported to have increased by 48% of manufacturers. Mirroring ONS data on construction output during the quarter, product sales remained lower compared to a year earlier.

Manufacturer expectations

It was a more mixed picture for manufacturers’ forward-looking expectations, however. Both heavy side and light side manufacturers expect the recovery to intensify in Q4, with 56% of all firms anticipating a rise in sales in the next quarter, on balance.

However, when looking to the next 12 months, 24% of heavy side anticipated a fall in sales, contrasting with 21% of light side manufacturers anticipating a rise. Reflecting the uncertainty over the outlook for construction in 2021, negative balances remain for manufacturers’ investment intentions in new structures, plant and machinery, whilst adjustments to new working practices mean that investment in e-business remains a priority.

Uncertainty

Rebecca Larkin, Senior Economist at the CPA

Rebecca Larkin, CPA Senior Economist, said: “Despite the welcome news of a pickup in activity, the Q3 survey captures the uncertainty over the recovery path for the economy and construction next year. There are already clear signs of differences in the outlook by sector, with house building subject to volatility as the stamp duty holiday ends and employment backdrop worsens, infrastructure benefiting from new and ongoing major projects, and commercial facing near-term unknowns over demand for office and retail space depending on how embedded homeworking becomes in future.

“The uncertainty is proving to be a catalyst for manufacturers to prepare for how new ways of working may change supply chain distribution, notably through increasing investment in developing e-commerce.”

Key survey findings include:

  • 33% of heavy side firms and 48% of light side firms reported that construction products sales rose in Q3 compared with the previous quarter, improving from the weakest balances in nearly 12 years.
  • On balance, 56% of both heavy side and light side manufacturers anticipated a rise in sales over the next three months.
  • Half of heavy side firms anticipated a decline sales over the next 12 months, according to a balance of 24%
  • 21% of light side manufacturers anticipated sales increasing over the next year
  • On the heavy side, 6% of firms expected to reduce investment in structures over the next 12 months, and 24% expected to reduce investment in plant/equipment.
  • 65% of heavy side firms and 43% of light side firms, on balance, also anticipated increased investment in e-business over the next year.
Advertisement

LEAVE A REPLY

Please enter your comment!
Please enter your name here