Q1 Growth Despite Referendum Concerns
May 2016

CAB members have contributed for nearly 4 years to a unique quarterly state of the market survey which has acted as a leading confidence indicator for the whole of the aluminium in building sector.

In our latest report, it is clear from the marketplace that a few large projects predominantly in the South East have stalled with a degree of uncertainty surrounding the EU Referendum on 23 June. However, from speaking to a range of members these delays do not appear to have so far extended to regional projects.

The latest figures highlight that overall the construction industry reported an increase in activity in Q1, 2016 which marked 12 straight quarters of expansion in activity. CAB members anticipated an increase in sales for the following quarter and the year ahead although the net balance of 44% and 50% respectively is the lowest for 3 years reflecting uncertainty and expectations of a pause in activity in the run up to the Referendum. However, demand for CAB member products tends to be towards the end of the building process and weaker performance in Q1, to some extent, reflects slower activity from the rest of the supply chain at the end of 2015.

In other surveys compiled by the Construction Products Association, enquiries balances improved for specialist contractors and SME builders in Q1 suggesting a sustained level of underlying demand.

In common with the rest of the Construction sector, the key driver of cost inflation for CAB members continued to be wages and salaries in Q1, reflecting the rise in demand for skilled labour. Highlighting wider developments in the global economy, fuel costs were lower for 22% net balance of members.

Demand was reported as the key constraint to sales growth over the next 12 months (67%). The other expected major constraint was capacity (11%). 6% of members reported labour availability, finance availability, capacity and imports as potential constraints.

In Q1, 57% of members on balance reported that investment in plant & equipment was higher than a year ago. A balance of 47% also reported increased investment for property and product development. For the 12 months ahead, product improvement was the focus of capital investment intentions with 76% of members on balance anticipating increased capital investment in this area. Members forecast that expenditure on R&D and plant & equipment (both 53% on balance) would also increase in the year to 31 March 2017.

We are now compiling in association with the Construction Products Association a short presentation for delivery at the CAB AGM on Thursday 23 June which will summarise the very latest position amongst construction surveys and consider the forecasts going forward for either an ‘In’ or ‘Out’ vote in the EU Referendum on the same day.

For more information on CAB and how to join contact the CAB office on 01453 828851
or email julie.harley@c-a-b.org.uk