Exports provide some respite for manufacturers

Published:  11 July, 2011

LONDON: The Construction Products Association’s latest State of Trade Survey, which has been launched today, indicates that for many construction product manufacturers, export activity is providing a vital lifeline, whilst the outlook in the UK remains very uncertain.

With the total number of manufacturers exporting goods increasing by 18% compared to Q1 and overall export volumes rising, construction products sales increased for the second consecutive quarter in 2011, aided by a competitive exchange rate.

However, despite this positive news there was growing concern over increasing cost pressures with 95 per cent of firms reporting fuel, energy and raw material price inflation during the last 12 months, which concurs with today’s ONS data reporting that manufacturing input prices rose 17% over the past year. Furthermore the Association’s survey suggests that costs are expected to increase further in the coming year.

Commenting on the figures, Construction Products Association senior economist, Kelly Forrest said: ‘While demand for the UK domestic market remains subdued, an increasing number of product manufacturers are turning to exports. These companies are quietly optimistic for the next 12 months. However, with consumer sentiment faltering at home and macroeconomic forecasts downgraded once again, there is enormous concern that domestic demand will decline as public spending is cut over the coming months.

"Although manufacturers are currently benefiting from a favourable exchange rate, there is great concern within the industry that this will be outweighed by the continual impact of rapidly rising costs."

Other key points include:

  • 39% of light side manufacturers increased sales to overseas markets in Q2, with 21% of these firms raising sales by more than 5%
  • Exports of heavy side products rose at 23% of firms in Q2
  • Sales rose according to 61% of heavy side firms and 59% of light side firms in Q2 (year-on-year)
  • On balance, 42% of heavy side firms and 44% of light side firms expect sales to rise over the next year but 71% of manufacturers expressed concern that domestic demand could constrain activity during the year
  • Product improvement attracted greater investment during the past year, with 70% of light side firms and 67% of heavy side firms increasing their spend

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