Further improvement in sales volumes
Positive second quarter for mineral products sales points to improvement in second-half construction output
FOLLOWING significant improvement in sales volumes of mineral products since mid-2013, the latest Mineral Products Association (MPA) quarterly survey of sales volumes indicates further improvement in the first half of 2014.
Compared with the second quarter of last year, crushed rock was the fastest growing market (+9%) in the second quarter this year, whilst both asphalt and sand and gravel were 4% higher. Ready-mixed concrete sales fell 3.2% over the period, but the MPA says this decline should be viewed in the context of the very high volumes seen last year and the fact that underlying market trends remain positive.
Whilst last year’s results were stronger than anticipated, the latest MPA data indicate further growth in 2014, albeit more modest and stabilizing. However, even with 3% growth trends, the MPA says markets will not regain pre-recession levels until after 2020.
Provisional GDP figures have indicated a 0.5% fall in construction activity in the second quarter of 2014, reducing overall economic output by 0.03%. However, sales of MPA materials should be an early indicator of official construction output data and, therefore, construction activity can be expected to improve again during the third quarter of 2014.
MPA chief executive Nigel Jackson commented: ‘We are seeing continuing general growth in mineral products markets although, as expected, the speed of underlying growth has slowed from the end of 2013. We believe our figures indicate that the second-quarter reduction in construction activity highlighted in the recent GDP announcement is a blip and construction will be positive for the year.’
According to Mr Jackson, if the necessary increase in housing starts can be delivered and promised infrastructure investments are implemented, there should be further improvements in industry markets, although this will depend on potential economic headwinds and political uncertainties that lie ahead.
He said one issue which MPA members are beginning to raise concerns about, particularly in markets which are seeing strong growth, such as sand and gravel aggregates in the South East, is whether the planning system will be able to deliver the permissions required to meet aggregates demands associated with future housing and development activity.
‘This is an issue the industry and national and local government will have to monitor and manage carefully going forward if supply constraints which could impact on growth are to be avoided,’ said Mr Jackson.
