The construction products manufacturing sector grew for a fifth straight quarter in the third quarter of 2021, according to the latest state of the trade survey from the Construction Products Association.
This despite escalating cost pressures and lingering supply side problems which have been further exacerbated by a shortage of heavy truck drivers and disruptions at major ports.
In the third quarter, 44% of heavy-duty manufacturers said sales were up from the second quarter, while on the light side, 26% reported an increase. However, both balances were down compared to those recorded in the previous quarter.
Given a strong pipeline of new work in private housing, repair, maintenance and improvement of private housing (rm & i) and infrastructure, 56% of heavy wall manufacturers and almost two-thirds of manufacturers of Light Walls forecast further sales growth over the next 12 months.
Data from the third quarter, however, showed that cost pressures have intensified and spread from raw materials to fuel, energy and wages and salaries, due to the recent rise in global gas prices, electricity and crude oil, as well as a shortage of skilled and unskilled labor. Given the strong demand for building products and materials, capacity utilization also increased during the year through the third quarter, particularly on the heavy side.
Amandeep Bahra, CPA economist, said: “Despite difficult business conditions linked to Covid-19 and Brexit, manufacturers of construction products recorded a fifth consecutive quarterly increase in product sales in the third quarter. More encouragingly, manufacturers remained optimistic about sales growth over the next 12 months. However, the recent surge in global energy and raw material prices has pushed up energy and fuel costs for manufacturers. All of the companies surveyed reported an annual increase in fuel costs, while the rest citing higher energy costs hit a four-year high for energy-inefficient heavy panel makers and a nine-year high for lightweight panel makers. . This comes as raw materials and wages and salaries continue to exert upward pressure on input costs and with a record proportion of heavy firms operating at over 90% of their capacity, there is little Cost pressures are likely to ease anytime soon, especially since the full impact of rising energy prices is yet to be felt.
The main findings of the survey include:
- A balance of 44% of heavy panel manufacturing companies and 26% of lightweight panel manufacturing companies said sales of construction products increased in the third quarter compared to the previous quarter, the fifth consecutive quarter of growth.
- Overall, 56% of businesses on the heavy side and 64% on the light side anticipated increased sales over the next 12 months.
- Fuel costs have increased in annual terms, according to 100% of manufacturers polled on both the heavy and light sides, the highest balances since 2011.
- 93% of heavy parts manufacturers reported an annual increase in energy costs, the highest balance in four years.
- 89% of manufacturers on the light side reported an annual increase in energy costs, the highest record in nine years.
- Raw material costs have increased in annual terms according to a balance sheet of 93% of heavy sidewall manufacturers and 95% of light sidewall manufacturers.