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CPA survey cautiously optimistic
The Construction Products Association’s latest findings confirm that 2012 got off to a promising start, with sales rising compared to the first and last quarter of 2011. The good news comes with bad, however, as manufacturers remain cautious.
The Construction Products Association (CPA) represents 85 per cent (by value) of all manufacturers and suppliers of construction products in the UK. Its State of Trade Survey is conducted quarterly and provides a balanced view of industry opinion and prospects.
Results from the 2012 Q1 survey reveal that sales of both heavy and light side construction products rose in Q1 compared with both Q1 and Q4 2011, a trend that is expected to continue over the coming twelve months. Three-quarters of heavy side firms and 86 per cent of light side manufacturers cite mainland Europe as their key export market. Despite the Eurozone crisis, over a third (35 per cent) and two fifths (43 per cent) of heavy and light side firms respectively anticipate further growth in exports.
Sales may have increased, but strong inflation (in fuel, energy and raw materials prices) drove up unit costs in Q1, making trading conditions difficult. No Abatement is anticipated in the coming year.
Concern regarding the strength and stability of demand remains prevalent. Uncertainty over the second half of the year, and the higher perceived probability of projects with an anticipated start date of 2012 being postponed or cancelled, are both highlighted as significant downside risks. The potential for Eurozone demand to wane adds further to the uncertainty.
Employment levels steady
Following a prolonged period of job shedding between 2008 and 2010, employment within the product manufacturing sector has been relatively stable. Nearly a third (31 per cent) and over a half (51 per cent) of heavy and light side firms respectively state that there had been no change in their headcount during the preceding year. Conversely, both heavy and light side manufacturers anticipate that employment levels will rise over the coming 12 months, heavy side firms’ expectations being particularly bullish.
Capacity utilisation remains low relative to previous years, particularly among heavy side manufacturers. In Q1 only 7 per cent of heavy side manufacturers report working at over 90 per cent capacity. With light side manufacturers this figure is 21 per cent. Heavy side manufacturers anticipate that capacity utilisation will increase marginally over the coming 12 months, but only 12 per cent expect to be working at over 90 per cent capacity by Q1 2013.
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