Light side encouragement in UK

21 January 2013

An increase in the UK’s light side sales of construction products at the end of last year provided some encouragement after two tough quarters, a survey has shown.

The UK’s Construction Products Association’s latest State of Trade Survey indicated that, following disappointing second and third quarters, heavy side sales fell once again in the fourth quarter, while light side sales rose.

Construction Products Association economist Milja Keijonen attributed the fall in sales of heavy side products to difficult market conditions in the construction industry, where output fell 9% in the past year. She said that with light side products, the difficult domestic market was offset by strong exports to fast-growing Asian economies

“Looking to the year ahead,” she added, “both heavy and light side manufacturers expect this to continue.”

She said that heavy side manufacturers expected sales to fall in 2013 as a result of a subdued domestic market, where construction output was forecast to fall by 2.2%.

“However, light side manufacturers predict sales will increase in 2013, once again driven by export growth.”

Ms Keijonen said that 2012 had been a difficult year for the industry in the UK, certainly for heavy side manufacturers, and that 2013 was also likely to be extremely challenging.

“Light side manufacturers are going to be heavily reliant on exports if they are to achieve significant growth in the next 12 months. Yet, risks for product manufacturers are clearly on the downside due to the prevailing economic conditions and the effectiveness of government initiatives to boost construction,” she said.

The Construction Products Association’s State of Trade Survey found that 13% of heavy side companies reported a fall in quarterly sales, while 46% of light side firms indicated that sales were higher compared with the third quarter.

With heavy side, 9% of manufacturers experienced a decline in sales year-on-year, on balance, while 21% of light side companies said that sales were higher on an annual basis.

When it came to looking at whether costs had risen from a year ago, 72% of heavy side thought they had, while for light side firms it was 79%.

According to 6% of heavy side and 13% of light side manufacturers, employment fell, on balance. However, the Construction Products Association said that improvements in labour market conditions were forecast for 2013.

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