Continued momentum in mineral products sales
Latest MPA survey results contrast with more subdued official construction statistics
HIGHER mineral products demand in Great Britain through 2016, and particularly during the last quarter, indicates momentum in construction activity has continued into the start 2017, according to the Mineral Products Association (MPA).
As mineral products are by far the largest element of the construction supply chain, the MPA says its latest survey results provide a contrasting view to the more subdued official construction statistics.
Last year sales volumes of ready-mixed concrete in Great Britain improved by 4%, compared with 2015, matched by a 4.2% increase for aggregates, and a 4.6% increase for mortar, while asphalt sales remained broadly flat (+0.1%).
On a quarterly basis, sales volumes for these materials in the fourth quarter of 2016 were also positive, and improved compared with the weaker markets observed over the summer.
Sales of ready-mixed concrete and aggregates grew by about 1.5% in the fourth quarter of 2016, compared with the previous quarter, and by 2.4% for asphalt. In addition, mortar sales, underpinned by strong house-building activity, increased by 4.3% over the same period.
The MPA says materials such as ready-mixed concrete and aggregates, which are used across all major construction sectors, particularly in the earlier stages of projects, provide hard evidence of sustained activity on the ground.
However, despite the positive volumes evident since the EU Referendum, the regional picture is more mixed. In particular, reduced demand in Wales indicates declining construction activity there in 2016.
While the GB asphalt market was flat in 2016, sales volumes in England fell by 1.7% for the year, confirming industry concerns about lower and slower Highways England spending on renewals work and constrained local authority budgets.
Overall, although MPA markets, construction and the general economy in the UK in 2016 were clearly more resilient than anticipated, the MPA says some slowdown is still expected for 2017, when the impact of the depreciation of sterling and the start of the process of leaving the EU is likely to impact on overall economic activity.
The Association also believes the weaker outlook for both business investment and household real incomes in 2017/18 will constrain general construction activity and mineral products sales in the medium term.
Aurelie Delannoy, chief economist at MPA, commented: ‘Our data show that construction activity remains resilient, but as inflationary pressures build up, house building and construction of commercial offices and retail, the two sectors that supported activity last year, will be the most vulnerable if the risks of a general economic slowdown materialize.
‘Meanwhile, infrastructure spending is likely to be a more positive feature of construction, but only from 2018. This raises concerns about construction activity and related mineral products sales in 2017.
‘In times of great uncertainty about the future UK economic model and our relationship with our major trading partners, building and maintaining confidence is key to investment in construction and related markets. Accelerated delivery of smaller-scale infrastructure projects would send a strong signal to the industry and investors.’
