The latest CAB State of the Market figures for Q4, 2015 highlighted that CAB members continued to anticipate growth in sales. 71% net balance forecast growth in the next quarter (45% in Q3) and 75% in the year ahead (75% in Q3). This was also the eleventh straight quarter of increased activity across the construction supply chain. This continued momentum in demand was slightly dampened by the fact that main contractors’ expectations for work in Q1 were held back by the public housing sector in particular.
There was still spare capacity to be absorbed and overall expectations for capacity utilisation was slightly lower with 33% (39% in Q3) anticipating that they would be operating at over 90% capacity in the year ahead.
There was still forward confidence shown in terms of capital investment with two of the six metrics for capital investment showing increases for the year ahead compared to the past year, Plant & Equipment (76% net balance) and Customer Research (35% net balance). R& D (24%) and E-business (53%) showed no change year on year.
75% net balance of CAB members on balance reported an increase in wages and salaries but overall in the wider construction manufacturing sector, cost inflation was mitigated to some extent by falls in input costs and this was mirrored in our survey with net balances for energy costs (-6%), taxes (-13%) and fuel costs (-69%). It is worth noting that this is the 6th consecutive quarter that fuel costs were negative net balance in the survey.
- Members reported that they anticipate sales rising over the next quarter (71%) and the next 12 months (75%).
- Unit costs continued to rise, but only 50% net balance expecting a rise over the next year (75% in Q3/2015)
- Wages & salaries (75% net balance) were reported for the 7th successive quarter as the major cost factor closely followed by Exchange rates (35%), with Fuel Costs (-69% (-50% in Q3)), Energy costs (-6%) and Taxes (-13%) all negative on balance.
- 33% net balance of companies expected to operate at over 90% of capacity over the next 12 months (39% in Q3/2015)
- Headcount increase forecast for the year ahead was 47 % net balance compared to 58% in Q3/2015 but was behind the wider construction sector figure of 62% net balance.
- Labour costs had risen over the past year for 82% net balance of members (compared to 86% for the wider construction sector) and 76% forecast a rise in the year ahead (84% in Q3)
- Demand (59%) and labour availability (12%) were once again factors ‘likely constraints on activity over the next 12 months’. Encouragingly though 24% of respondents stated ‘No constraints’ (37% in Q3/2015)
The overall continued momentum in demand highlighted by the CAB Q4, 2015 State of Market Survey was slightly dampened by the fact that main contractors’ expectations for work in Q1, 2016 were held back by the public housing sector in particular.