Outlook not as bleak as ONS suggests, says CPA

The outlook for construction product manufacturers in the first quarter of this year was less bleak than official data suggests, according to the Construction Products Association.

The CPA’s latest State of Trade Survey, which has been launched today, reveals that “48% of manufacturers reported that sales of construction products rose in 2011 Q1, compared to just 14% in 2010 Q4.”

This picture contrasts with that painted by recent ONS data, which found that while GDP rose by 0.5%, that output for the construction sector fell by 4.7% for the first quarter of 2011.

Commenting on the figures CPA economics director Noble Francis said: “The survey highlights that the situation for construction product manufacturers remained challenging in the first quarter of 2011 yet this is a considerable improvement on 2010 Q4, which suffered greatly from the impacts of the bad weather in November and December.

“Yet the scale of the fall in the official figures is extremely surprising and inconsistent with information from this survey and anecdotal evidence from the industry.”

“Looking forward, however, the outlook remains very uncertain and 79% of manufacturers stated that the strength of demand over the next 12 months will be their key constraint.

Given that we are yet to see the full effect of the public spending cuts, in the near term we do not expect that private sector construction will be sufficiently strong to compensate for these cuts. As a result, the association’s latest construction forecasts anticipate that output in the industry will fall in 2011 and 2012 before it sees any significant growth in 2013.”

The CPA survey also found that:

• Annual cost inflation remained high
• Growing confidence among manufacturers means that employment creation is likely over the next 12 months
• 33% of manufacturers reported that exports rose in the year to March.