By Samuel Rapley 30/01/2017

Under: Health and Safety News

UK Construction Manufacturing Reports Growth

For the last quarter of 2016, 78% of heavy side firms (materials such as steel, bricks, timber and concrete) reported an increase in sales on an annual basis. On the light side (products such as insulation, boilers, glass and lighting) 75% of firms reported that sales were higher than a year earlier. Results were not only the strongest of the year but also represented the fifteenth consecutive quarter of growth.

Despite the positive news, the report also emphasised nervousness in the industry with many anticipating a tougher year ahead in 2017. Among heavy side manufacturers only 6% anticipate a rise in sales over 2017 Q1, while 29% of light side manufacturers anticipate a rise during the same period.

The negative outlook is based on the continuing uncertainty surrounding Brexit, the weakening of the pound and increased material costs - issues expected to hit heavy side manufacturers hardest. In Q4 2016, two-thirds of firms reported an increase in costs, the highest in five years, and a further 89% anticipate an increase over the next year.

The anxiety for 2017 in construction is mirrored in wider industry reports. A survey of executives by the EEF, the manufacturers' organisation, reported that UK manufacturers are braced for a 'bumpy ride' this year, with business leaders more concerned about business risks than a year ago.

Rebecca Larkin, CPA Senior Economist said:
"Unsurprisingly, manufacturers' expectations for 2017 appear to have been tempered by the uncertainty surrounding the economic and political outlook... Rising costs of imported raw materials continue to be a primary driver of cost inflation, but there is now an indication that currency weakness is filtering through to higher energy and fuel costs too.

The impact of Brexit on the construction industry is, as yet, unclear, but it is unlikely this year will be as buoyant as last unless government is able to provide greater certainty and the industry is able to manage cost pressures."

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