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Product Sales Grow But Rising Costs Are A Worry

SALES of construction products, including flooring, saw increases in the last quarter of 2013, says the latest state of trade survey from the Construction Products Association (CPA) to which the CFA is affiliated.
The rising sales were driven by wider UK economic growth and key private construction sectors, along with strength in export markets.
Looking ahead in 2014, product manufacturers are also anticipating further growth in sales, both domestically and abroad, over the next year.
Dr Noble Francis, (right) economics director at the Construction Products Association, said: ‘In previous surveys, private housing was the key driver of domestic demand; however, Q4 has seen construction growth spread to other key sectors such as private commercial, the largest construction sector, and infrastructure.
‘Demand for exports picked up in the second half of 2013 and manufacturers anticipate exports rising further in 2014, primarily due to wider economic recovery in key export markets combined with the relatively low value of sterling.
‘As a consequence, a rise in product sales during Q4 occurred for the majority of manufacturers, across both heavy and light side products.
‘Importantly, manufacturers reported that, overall, capacity is not a significant issue and is unlikely to be during 2014 despite an expected rise in demand.’
However, he expressed a serious note of concern: ‘Manufacturers reported margins continue to be severely hindered by cost rises, especially in energy and transport fuel.
‘Manufacturers also reported that labour costs and materials costs rose in the fourth quarter.’
Other key points in the state of trade survey include:
67% of both heavy and light side manufacturers reported higher sales than the third quarter.
61% of heavy manufacturers and 67% of light side manufacturers also reported that sales rose in Q4 compared to one year earlier.
For 2014 as a whole, 73% of heavy side manufacturers and 85% of light side manufacturers are anticipating a rise in sales.
45% of heavy and 58% of light side manufacturers anticipated that exports would rise in 2014.
Over the next 12 months, 24% of heavy and 25% of light side firms are anticipating that they will be operating at 90% capacity or above.
82% of heavy and 86% of light side manufacturers reported rises in fuel costs.
The Construction Products Association represents the UK’s manufacturers and suppliers of construction products, components and fittings.
The sector has an annual turnover of more than £40bn, accounts for over a third of total construction output and directly provides jobs for more than 300,000 people.

This article has been reproduced from the Contract Flooring Journal website. You can find them at www.contractflooringjournal.co.uk.