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Exports provide vital lifeline as UK remains subdued, says CPA

Exports are proving a “vital lifeline” for construction manufacturers as demand in the UK remains subdued, the Construction Products Association said today.

The CPA put out its latest State of Trade Survey this morning, which is conducted quarterly and provides insight into current and expected future industry trends by taking a percentage of firms reporting a rise, less those reporting a decline.

It says Q2 2011 has seen the total number of manufacturers exporting goods increase by 18 per cent compared to Q1. Sales increased for the second consecutive quarter in 2011, helped by a competitive exchange rate.

But it also found a growing concern over increasing cost pressures, with 95 per cent of firms reporting fuel, energy and raw material price inflation during the last 12 months – in line with ONS data that says manufacturing input prices rose 17 per cent over the past year. 

CPA senior economist Kelly Forrest said: “With consumer sentiment faltering at home and macroeconomic forecasts downgraded once again, there is enormous concern that domestic demand will decline as public spending is cut over the coming months.

“Although manufacturers are currently benefiting from a favourable exchange rate, there is great concern within the industry that this will be outweighed by the continual impact of rapidly rising costs.”

CPA findings:

  • 39 per cent of light side manufacturers increased sales to overseas markets in Q2, with 21 per cent of these firms raising sales by more than 5 per cent.
  • Exports of heavy side products rose at 23 per cent of firms in Q2.
  • Sales rose according to 61 per cent of heavy side firms and 59 per cent of light side firms in Q2 (year-on-year).
  • 42 per cent of heavy side firms and 44 per cent of light side firms expect sales to rise over the next year - but 71 per cent of manufacturers expressed concern that domestic demand could constrain activity during the year.
  • Product improvement attracted greater investment during the past year, with 70 per cent of light side firms and 67 per cent of heavy side firms increasing their spend.

Meanwhile, the latest Office for National Statistics data says the total volume of construction output increased by 0.4 per cent in May compared with the estimate for April. The ONS, which compares the total output volume for the three months from March to May with that of the same three months one year ago, says output fell by 2.7 per cent compared with May 2010.

The volume of construction output rose by 0.1 per cent. New work rose by 0.3 per cent and repair and maintenance fell by 0.3 per cent.  The largest increase was 6.3 per cent and was in public housing new work.  New infrastructure work showed an increase of 4.7 per cent, while private industrial new work showed the largest fall of 5.9 per cent.

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