Dismal outlook as manufacturers expect recession

Two years of sales growth for construction product manufacturers ended in the third quarter of 2022 on the back of slowing demand for repair and maintenance.

The latest figures from the Construction Product Association’s state of trade survey showed 12% of heavy-side manufacturers reporting a decline in sales in Q3, the first fall since the second quarter of 2020, when nationwide lockdowns were introduced because of the covid-19 pandemic.

The 17% of light-side manufacturers reporting a rise in sales was also the lowest balance in two years, with 96% of these firms reporting a rise in fuel cost.

Kwarteng Sept 1

Former chancellor Kwasi Kwarteng’s mini-budget last month has knocked confidence and growth prospects, the CPA said

Economic headwinds are expected to continue, too – 82% of heavy-side firms and 61% of light-side firms expect overall costs to increase over the next year, with 53% of the former and 13% of the latter anticipating a decline in sales over the same period.

Rebecca Larkin, senior economist at the CPA, said the weakening economic indicators in construction were “joined by broader deterioration in the UK economy” with high inflation eroding household finances and project budgets.

She added that that sacked chancellor Kwasi Kwarteng’s early fiscal plans had “knocked confidence and growth prospects even further” and said that manufacturers’ anticipation of a contraction in sales was “no surprise” given that many are expecting a recession in the new year.

“This combines with the strong rates of input cost inflation that already pervade the supply chain and have begun to delay decision-making on construction projects,” she said.

“Hopefully some of the unanswered questions around the government’s spending plans will be resolved in the coming months and help to lift the cloud of uncertainty hanging over our industry.”