New figures from the Mineral Products Association (MPA) said , sales volumes for aggregates and ready-mixed concrete increased by 9.2% and 9.8% respectively between April and June this year, while asphalt sales volumes rose 11.3%.
While the recovery in sales volumes for these materials indicates general construction activity has also rebounded, any growth remains heavily skewed towards housing. Mortar sales recovered strongly during the period, up 20.9%, underpinned by continued momentum in housebuilding. The MPA quarterly sales survey shows that the volume of mortar sold in 2018Q2 was the highest quarterly total since records began in 2004. Yet, sales volumes for every other material monitored remain well below their pre-recession peak in 2007.
Despite welcoming the recovery, the MPA stated underlying longer-term trends remain subdued.
"Sales volumes for all materials except mortar were lower in the first half of 2018 compared to the same period last year, as well as on an annual basis," the organisation said.
"In the year to June 2018, sales volumes of aggregates were 1.7% lower than the previous year, 3.1% lower for asphalt, and 5.4% lower for ready-mixed concrete. By contrast, mortar sales volumes grew by 12.7% over the same period. The longer-term weakening in mineral products markets suggests construction activity outside housebuilding remains subdued."
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Continuing the MPA said regional disparities also show "interesting patterns".
"Sales volumes for asphalt in the first half of 2018 point to positive road activity in the South East and South West," the trade association revealed.
"This was offset by declines in the West Midlands, the northern regions of England, and most particularly in Scotland, where some large transport projects came to an end last year. Ready-mixed concrete sales by contrast were weaker across all regions of Great Britain compared with the first half of 2017. The biggest decline took place in London, which had seen very strong post-recession growth, and most likely reflects a slowdown in commercial office building."
Aurelie Delannoy, Director of Economic Affairs at MPA welcomed the recovery in sales volumes but said the outlook for this year has not changed and "remains subdued".
"Sales volumes weakened in the past year, in line with general construction work," she said.
"Outside housebuilding, there are limited sources of growth. Major infrastructure investments such as High Speed 2, Hinkley Point C and Highways England's road programme should provide a boost, most noticeably from 2019 onwards, if momentum is sustained.
"There is little doubt that the heightened level of economic and political uncertainty is having an adverse impact on private investment, notably in some areas of construction such as commercial office building. This is not helped by continuing uncertainty about the delivery of infrastructure projects and related timings. The construction supply-chain, including mineral products, is key to the delivery of government policy on housing and infrastructure but is in a very challenging situation when it comes to planning for future work and investment."
Continuing, Ms Delannoy said a potential 'no deal' Brexit would "further threaten construction investment".
"In such a scenario, the mineral products industry and other sectors in the construction supply chain would become early victims of the economic fallout," she said.
"As such, the negotiating parties need to maintain focus on economic realities to avoid such an outcome."
(LM)
