Construction market demand for mineral products was higher in 2017Q1 compared with the previous quarter, providing some evidence of continued impetus in construction activity at the start of the year. Mineral products such as aggregates and ready-mixed concrete (RMC) are major elements of the construction supply chain, particularly in the earlier stages of projects, so the MPA results point to sustained level of construction activity on the ground.
Sales of aggregates grew by 2.1% in 2017Q1 compared to the previous quarter, and RMC by a positive but more subdued, 0.7%. Mortar sales accelerated further after the strong performance seen at the end of 2016, with volumes up 6.6% in 2017Q1. Mortar sales are closely linked to housebuilding and the rapid growth of this market since last summer suggest that housing remains the primary driver of construction activity. The volume of asphalt sales by contrast declined by 0.8% in 2017Q1.
Overall, our sales volumes for the year finishing in March 2017 revealed healthy rates of growth across all major MPA construction minerals, with asphalt up 5.2% compared to the previous year, 5% for aggregates volumes and 4.3% for RMC. Mortar sales, the strongest market, grew by 6.9% over the period.
Ten months after the outcome of the EU referendum, it is clear that MPA markets and the construction sector have shown more resilience than expected. There remains nonetheless one recurring issue for asphalt producers: whilst the overall annual performance in asphalt sales is positive, the quarterly profile points to a very uneven level of activity. The industry has been raising concerns since the end of 2015 over the phasing and visibility of Highway's England's road programme, concerns that were supported by the recent findings of the National Audit Office. In their latest assessment on the progress with the Road Investment Strategy, they found that Highways England was struggling to deliver planned projects. This situation makes it very challenging for the industry to gain a clear understanding of the asphalt market going forward and the timing of further increases in demand arising from Highways England road programme.
Aurelie Delannoy, Chief Economist at MPA, commented, "We welcome the positive results in our markets in the first quarter of the year as a clear indication that construction activity still has some impetus. Whilst mineral products producers remain relatively optimistic, their prospects for growth in the coming months may be dampened by the anticipated slowdown in both the general economy and in private construction activity this year."
"Post-election, Government's policy development and implementation, as well as swift and constructive progress in the Brexit negotiations, will be central to the future health of the UK economy, the construction sector and ultimately, the mineral products sector.”
MPA sales volumes in GB, Summary table
| 2017Q1 |
Asphalt
|
RMC*
|
Crushed Rock
|
Sand & Gravel
|
Mortar
|
| Q on same Q prev. Year |
12.8% |
4.3% |
6.5% |
3.5% |
13.0% |
| Year to date |
12.8% |
4.3% |
6.5% |
3.5% |
13.0% |
| Annual rolling average |
5.2% |
4.3% |
6.0% |
3.1% |
6.9% |
| Q on prev. Q (seasonally adjusted) |
-0.8% |
0.7% |
3.8% |
-1.2% |
6.6% |
% Change on previous period (Seasonally Adjusted)
| |
Asphalt
|
RMC*
|
Crushed Rock
|
Sand & Gravel
|
Mortar
|
Construction Output
|
| 2015 |
6.5% |
4.3% |
5.8% |
3.1% |
4.2% |
4.9% |
| 2016 |
0.1% |
4.0% |
5.3% |
2.0% |
4.6% |
2.4% |
| 2016Q2 |
10.6% |
3.1% |
3.0% |
0.3% |
0.3% |
0.9% |
| 2016Q3 |
-0.3% |
-1.2% |
0.4% |
-2.0% |
1.0% |
-0.3% |
| 2016Q4 |
2.4% |
1.3% |
-0.9% |
6.2% |
4.3% |
1.0% |
| 2017Q1 |
-0.8% |
0.7% |
3.8% |
-1.2% |
6.6% |
0.2%** |
|
* RMC is the sum of sales from both fixed & site plants.
** ONS preliminary estimates.
|
Seasonally adjusted MPA sales volumes in GB (thousand tonnes or cubic metres)
Ends.