Downbeat mood for UK manufacturing

By Helen Wright03 October 2011

UK trade body the Construction Products Association's third quarter State of Trade Survey has revealed a downbeat mood among UK-based manufacturers amid rising prices and weakening domestic demand.

Both heavy and light construction products manufacturers surveyed by the association expressed concerns over the impact of continuing global economic uncertainty, and were not optimistic about sales growth over the next 12 months.

According to the survey, 94% of heavy manufacturers and 71% of light manufacturers suggested weak demand would constrain output over the next 12 months, while the majority of manufacturers (63% of heavy companies and 75% of light companies) expected no change in their export sales over the next year.

Indeed, third quarter year-on-year sales fell according to 44% of heavy manufacturers, although 52% of manufacturers of light products said they continued to see growth.

Cost inflation

Meanwhile, strong inflation in energy, fuel, and raw materials prices drove unit cost inflation for both light and heavy manufacturers in the third quarter - 88% of heavy manufacturers and 89% of light manufacturers reported rising energy prices. Rising raw materials prices also affected 80% of heavy companies and 84% of light companies.

Fuel cost inflation was even more widespread, with 94% of heavy manufacturing companies and 100% of light manufacturers reporting increases.

And as public funding for domestic projects continues to shrink, international markets became increasingly important to UK construction product manufacturers in the third quarter - 42% of light manufacturers reported international export increases year-on-year, while 13% of heavy manufacturers reported export growth.

Construction Products Association senior economist Kelly Forrest urged the government to fast-track new finance initiatives.

"It is critical that government does its utmost to sustain economic growth by investing in areas of long term benefit to the UK, such as house building and infrastructure, by bringing forward finance allocated for future years and attracting private finance at a time when public finances are constrained."

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