CAB ceo Justin Ratcliffe looks at the overall positive signs in the latest CAB State of the Market Survey for Q3, 2014
The latest CAB State of the Market figures for Q3, 2014 highlight the strength of the aluminium in building sector and to a certain extent the economy in general. A rise in third quarter sales was reported by 80% net balance of members compared with the previous quarter and 87% net balance reported a rise in sales compared with 12 months ago. There are very clear signs that the recovery in our sector has become more sustainable and this is highlighted by further confidence of rising sales in both the final quarter of 2014 (60% net balance) and especially the year ahead (93% net balance).
- 87% of CAB members, on balance reported a rise in sales in Q3 compared with the previous year
- 93% of members reported that they anticipate sales rising over the coming year
- Costs continued to rise with 53% net balance reporting a rise in costs in Q3 compared to a year ago largely due to wages and materials. 79% net balance reported that costs would rise in the next 12 months (75% in Q2)
- Headcount increased compared to a year ago for 73% net balance of respondents while 87% forecast an increase in the year ahead (69% in Q2).
- Raw Material prices become a key factor (21% of respondents) in ‘likely constraints on activity over the next 12 months’ after Capacity (36%) and Demand (29%).
The survey represents another strong quarter for the aluminium in building sector with confidence in forward demand and especially capital investment metrics such as product improvement and plant & equipment comparable with the previous quarter or slightly above. The most significant increase, year on year, was again in Plant and Equipment at 79% net respondents for the year ahead (69% for Q2).
With increased sales activity, inevitably almost, costs are rising with wages overtaking materials as the biggest factor for the second successive quarter. The other key drivers were energy costs and taxes. Exchange rates were negative on balance for the second successive quarter.
In the wider construction sector, there was clear evidence according to the Construction Products Association of tender prices rising. Many major contractors were still working on projects won in 2013 at relatively low prices so continued to suffer from the key concerns of rising costs and skills availability, especially in areas such as private housing.
A slightly less favourable picture of Q3 construction is put forward in the latest Constriction PMI report from Markit CPS. They state that looking ahead, construction firms are more cautious about their prospects for output growth than at any time since October 2013. Their view is that although positive overall, a range of factors tempered business optimism in September 2014 including strong cost pressures, concerns about skilled labour and signs that house building growth has cooled from the multi-year records set earlier in 2014. Meanwhile RIBA’s ‘Future Trends Workload’ survey of UK architects for August 2014 showed that confidence in the prospects for future workloads remained upbeat with a positive balance figure of +28, driven primarily by growth in the commercial and private housing sectors.
It is clear that the aluminium sector is still ahead of the wider construction sector but we still need to urge government to be clear about infrastructure investment and there needs to be a steady flow of new projects.
CAB’s unique quarterly State of the Market Surveys provide an insight into current and expected trends in the aluminium in building sector. Each quarter CAB members complete a personalised version of the questionnaire which is then integrated into the wider Construction Products Association (CPA) survey. This utilises a balance of respondents to assess results and identify trends. A positive balance of respondents means that the percentage of firms reporting a rise is more than the proportion of firms that report a decline.
For further information on the Survey or CAB in general contact Justin on 01453 828851 or email email@example.com