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Construction product firms warn over cost inflation

Construction product manufacturers have reported another strong quarter of growth – but warned over costs pressures from wages and salaries.

The Construction Products Association’s latest State of Trade Survey shows increasing signs of optimism in the sector and, for the first time in five years, product manufacturers reported increases in levels of capital investment.

But both heavy side and light side firms reported increasing cost pressures stemming from wages and salaries.

Kallum Pickering, senior economist at the Construction Products Association, said: “These results confirm that the construction products industry is firmly on the path of recovery. All firms reported that sales increased compared with the second quarter of last year and, looking forward, no firms expect sales to fall over the coming year.

“Product manufacturers increased headcount for a fourth consecutive quarter, and whilst this is positive news, data on cost inflation suggests that wages are beginning to make a significant contribution to rising costs of firms. 95% of heavy side firms and 80% of light side firms indicated that wages and salaries contributed to cost inflation in Q2”

Key findings from the survey include:

  • 100% of construction product manufacturing firms, on balance, reported a rise in sales in Q2 compared with the previous year.
  • 83% of product manufacturers reported that they anticipate sales rising over the coming year.
  • Costs continue to rise with 87% of firms reporting a rise in costs primarily due to wages and salary.
  • Headcount increased compared to a year ago for 70% of heavy side and 82% of light side product manufacturers.

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