Despite post-Brexit uncertainty, sales of construction products increased for the 14th consecutive quarter in the third quarter of the year, according to the Construction Product Association (CPA).
In the first study after the EU referendum, the latest State of Trade Survey shows construction product sentiment improved between June and September, suggesting “activity remained resilient following initial uncertainty in the run-up to, and immediately after, the EU referendum in June,” says Rebecca Larkin, CPA senior economist.
According to the report, half (50 per cent) of light side firms reported an increase in construction product sales with more than a quarter (26 per cent) of heavy side firms on balance also seeing growth in the third quarter of 2016 compared with the previous three months, although this was lower than the balance of 52 per cent recorded in quarter two.
On an annual basis, heavy side and light side firms said sales rose by 68 per cent and 60 per cent on balance, respectively, with almost half of heavy side manufacturers (45 per cent on balance) anticipating a rise in sales in quarter four.
According to the survey, almost two-thirds (67 per cent) of light side firms expected an increase in product sales in the next quarter, compared to a zero balance in quarter two with 42 per cent of heavy side firms and 40 per cent of light side firms anticipated an increase in export sales over the next year.
Annual cost increases were reported by 57 per cent of heavy side manufacturers and 56 per cent of those on the light side.
“In contrast to pre-referendum pessimism evident in manufacturers’ forward-looking views in last quarter’s survey, expectations for near-term sales turned markedly higher in quarter three,” says Larkin.
“Interestingly, the sharp depreciation in Sterling does not appear to have translated into an increase in export sales in our sector.
“Instead, the effect of the weak currency has been manifested in rising costs for imported raw materials and higher fuel bills, adding to the existing inflationary pressures on wages created by skills shortages. Nevertheless, manufacturers anticipated a pickup in overseas sales over the next 12 months.”