Eurozone slowdown, cost inflation threaten construction sector, UK

The Construction Products Association’s (CPA) latest State of Trade Survey, which has been launched Monday, shows that although a Eurozone crisis appears to have been averted for the time being, the prospect of an economic slowdown in the major European economies, together with increasing global energy and raw material prices, remain as the major threats to further recovery in the UK construction products industry.

Commenting on the figures, CPA senior economist, Kelly Forrest said: “It is encouraging that sales rose in the first quarter, but manufacturers also highlighted the key factors that threaten growth throughout 2012 and into 2013, these factors include the continuing uncertainty within the euro zone, and significant concern regarding rising costs, especially fuel costs.

“With more than 75% of construction products exports being absorbed into the European market, recent forecasts from the OECD indicating a slowdown in key Eurozone countries, such as Germany and France, potentially threaten prospects of further growth for product manufacturers.

“Construction product manufacturers have also been hit hard by rises in fuel prices. More than 90%, on balance, experienced fuel price inflation in 1Q. Oil prices recently reached $125 per barrel, their highest level in almost four years and the full effects of this will be felt throughout 2012.”