Sales of construction products rises

Sales of construction products continued to rise during the third quarter of 2010 but this is unlikely to be sustained next year says the latest Construction Activity Barometer from Ernst and Young and the Construction Products Association.

Although the Barometer indicator has fallen marginally from the previous quarter, a reading of 74 still suggests a healthy increase compared with last year - a figure of 50 represents no change in sales compared to the previous year while below 50 represents a fall.

However, the report says the current cautious optimism is unsustainable in the long term as the buoyancy of the past six months is relative to the depressed state of the industry during 2009 when private sector demand contracted at an unprecedented rate.

Noble Francis, economics director for the Construction Products Association said sales of both heavy side products, typically used in the early stages of the construction process, and light side products, such as paints, heating and lighting products, were strong relative to the third quarter in 2009.

“Expectations about the future, however, were more subdued, particularly on the heavy side. From a peak of 81 in 2010 Q2, the expected heavy side sales index fell to 50, suggesting that sales volumes are anticipated to plateau in Q4. Light side respondents, however, continue to be optimistic about their sales over the short term and the light side expected sales index stood at 63, its highest level since the first quarter of 2008, for the second consecutive month”.

Respondents, however, did warn that recovery is unlikely to be sustained beyond 2010 and expressed concern about the pending Comprehensive Spending Review later this month.