The construction product manufacturing sector saw a fourth straight quarter expansion in the second quarter of 2021, according to the Construction Product Association’s (CPA) latest State of Trade Survey.

The main drivers of growth continued to be private housing construction, infrastructure and private housing repair, maintenance and improvement (rm & i), where activity continues to be well above pre-coronavirus levels. Material cost inflation remained a prominent feature, however, and supply-side restraints were seen as a major concern for the year ahead.

In the second quarter of 2021, nearly two-thirds of heavy side manufacturers and 44% of light side manufacturers said sales were up compared to the first quarter. With private housing and private housing construction demand expected to be sustained by both government incentives and an increased appetite for properties with more outdoor and office / work space, 67% of Lightside companies expected product sales to increase in the coming year. On the other hand, that balance (79%) was the highest in almost eight years, thanks to work on large infrastructure projects. The hiring plans also stayed on the table, with 61% of the light-side firms anticipating an increase in the number of employees, the highest balance in seven years.

The supply of raw materials and components remains the top concern of manufacturers in the coming year due to bottlenecks in the global supply chain. Unsurprisingly, alongside demand, commodity prices followed as a potential drag on hard-side businesses, while labor availability concerns were on the agenda for light-side businesses.

Amandeep Bahra, CPA Economist, said, “The recovery in the construction products industry is well underway, and manufacturers saw their fourth consecutive quarterly increase in product sales in the second quarter of 2021. This positive news was accompanied by expectations for further growth in the coming year and the hiring plans. However, given the ongoing problems in the global supply chain due to the shortage of shipping containers and drivers, a record proportion of manufacturers cited the supply of materials and components as the main obstacle for the 12 month period.

“This has inevitably fueled heavy side concerns about high commodity prices in the coming year. Since self-isolation and the Brexit rules also bite, the long-standing problem in the industry about the availability of labor was a central risk for Lightside companies. “

Key survey results include:

  • A balance of 63% of heavy-side companies and 44% of light-side companies said sales of construction products rose in the second quarter from the previous quarter, the fourth consecutive quarter of growth.
  • On balance, 79% of the heavy-side companies and 67% of the light-side companies expected an increase in sales in the next 12 months.
  • 52% of the heavy-side companies and 45% of the light-side companies named material / component supply as the factor that would most likely reduce production in the next 12 months, the highest proportions ever.
  • According to 15% of heavy-side companies and 32% of light-side companies, demand was cited as the main expected barrier.
  • On the light side, 16% of companies cited labor availability as their main constraint over the next 12 months, the highest since 2018 in the fourth quarter.
  • On the flip side, 15% of companies cited commodity prices as their main constraint over the next 12 months, the highest percentage since the fourth quarter of 2010.
  • 61% of light-side companies expected their headcount to increase over the next 12 months, the highest balance in seven years.

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