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The Construction Products Association's (CPA) State of Trade Survey for 2017 Q4 reveals issues such as rising inflation, slowing economic growth and an uncertain UK post-Brexit deal are all expected to weaken activity in 2018.
Early signs of slowing activity were also reported in the final three months of 2017, and construction product manufacturers are expecting a broader softening in market conditions this year.
A total of 6% of heavy side manufacturers, such as steel, bricks, timber and concrete, reported a decrease in product sales in Q4, compared to 10% reporting a rise in Q3. Despite being the first negative balance since 2013 Q1, sales on the light side (includes non-structural and finishing products such as insulation, boilers, glass and lighting) were still reported higher by half of manufacturing firms.
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Both heavy side and light side firms are expecting weaker sales expectations extending across the next 12 months, despite an anticipated modest pickup in sales during the first quarter of 2018. No heavy side firms and only 10% of those on the light side expected an increase in product sales this year.
Annual cost increases were also reported by 87% of manufacturers on the heavy side and 80% on the light side during Q4, with raw materials costs rising 87% of heavy side manufacturers and 91% of those on the light side.
Overall, 73% of heavy side manufacturers anticipate a rise in costs over the next year, along with 80% of light side manufacturers.
Rebecca Larkin, CPA Senior Economist, said: "The survey echoes other industry data that has shown the prolonged period of growth in construction activity since 2013 started to lose pace in the closing months of 2017.
"Of note are the signals of a leaner 2018 with heavy side expectations for sales growth at their lowest in five years, reflecting a backdrop of a slower economy, Brexit uncertainty and falling new orders in key sectors such as commercial offices."
(LM)
