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Wages drive cost increase for product manufacturers but sales rise

Nearly 80 per cent of construction product manufacturers have reported a rise in wage and salary costs over the past year, even as product sales rise.

According to the Construction Products Association’s Q1 State of Trade Survey, 81 per cent of heavy-side firms reported a rise in wages and salary costs compared with Q1 2014, while 77 per cent of light-side firms saw these costs increase over the same period.

This was offset to some extent by a slump in fuel costs, in which 86 per cent of heavy-side and 83 per cent of light-side companies reported a fall over the past year.

More than 50 per cent of heavy-side and around 40 per cent of light-side firms said raw materials costs had risen over the period.

But despite increases in costs, the sales outlook among product manufacturers remained positive.

A balance of 50 per cent of heavy-side firms and 29 per cent of light-side firms reported that sales rose during the first quarter of 2015 compared with a year earlier.

Looking ahead, 69 per cent of heavy-side and 57 per cent of light-side product manufacturers said they anticipate sales rising over the coming year.

Although sales rose, exports fell for 25 per cent of heavy-side and 14 per cent of light-side companies.

The outlook for the next 12 months is more positive, with 29 per cent of heavy-side firms and 20 per cent of light-side firms expecting a rise in exports over the next year.

Commenting on the survey, Construction Products Association economist Rebecca Larkin said: “Product manufacturers opened 2015 with another positive quarter of sales growth, which underscores how the strength of the UK economy over the last 18 months has translated into increased activity in the construction sector. 

“Encouragingly, product manufacturers appear keen to capitalise on this sustained period of activity and shore up demand in the longer term. 

“Priority areas for investment over the next 12 months, cited by more than two-thirds of firms, were product improvement, research and development and e-business.”

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