UK construction sales rise

Sales of both heavy and light construction equipment in the UK got off to a good start in 2012, and manufacturers expect sales to continue to rise over the next year, according to the UK Construction Products Association.

However, the Association warned that the prospect of an economic slowdown in the major European economies, together with increasing global energy and raw material prices, remain major threats to further recovery in the UK construction products industry.

In its latest State of Trade Survey, the Construction Products Association said that 51% of manufacturers of heavy construction products reported a year-on-year rise in sales between the first quarter of 2011 and the first quarter of 2012.

Heavy equipment manufacturers were also optimistic on future prospects, with the survey revealing that 36% of companies expected sales to increase over the next 12 months.

Meanwhile, 53% of manufacturers of light construction products reported sales growth between the first three months of 2011 and the same period this year, and 34% of light side respondents to the survey forecast rising sales over the next 12 months.

Uncertainty

Construction Products Association senior economist Kelly Forrest said that while it was encouraging that sales rose in the first quarter, continuing uncertainty within the Eurozone, and significant concern regarding rising costs were clouding the outlook.

"With more than 75% of construction products exports being absorbed into the European market, recent forecasts from the OECD indicating a slowdown in key Eurozone countries, such as Germany and France, potentially threaten prospects of further growth for product manufacturers," Ms Forrest warned.

She added, "Construction product manufacturers have also been hit hard by rises in fuel prices. More than 90%, on balance, experienced fuel price inflation in the first quarter. Oil prices recently reached US$125 (€94) per barrel, their highest level in almost four years and the full effects of this will be felt throughout 2012."

The survey also revealed that 74% of heavy side firms and 50% of light side firms expected unit costs to rise in the next 12 months.