Growth in mineral products sales in Great Britain (GB) ground to a halt in 2017 across all major markets, except for mortar. This is particularly significant for materials such as aggregates and ready-mixed concrete (RMC) which are the largest elements of the construction supply chain, ubiquitous to all types of construction work, and which are not usually stocked for future use on project sites. This means that the Mineral Products Association (MPA) Sales Volumes Survey, which represents between 70%-95% of the total GB market for these materials, can be used as a reliable and straightforward indicator of ongoing construction activity.

Sales volumes of RMC declined by 2.6% in 2017 compared to 2016, whilst asphalt (0.1%) and aggregates (-0.4%) sales remained broadly flat. Mortar sales, however, enjoyed another year of strong growth, up 11.1% compared to 2016. Whilst the trend in mortar sales provides strong evidence of continued momentum in housebuilding last year, sluggish markets for all other materials suggest construction activity in GB slowed down significantly in all other sectors through the year.

Regional dynamics are also striking. Asphalt sales continue to point to positive road activity in England being offset by sharp declines in Scotland. Similarly, the 2.6% fall in RMC sales was clearly driven by London and Scotland. The London market for RMC has now seen five consecutive quarters of comparative decline, with sales volumes in the final quarter of the year 14% below levels seen mid-2016, albeit from a high point. Excluding London, RMC sales in the rest of GB show a more muted decline of 1.2% during the year.

The latest ONS data¹ shows total construction output is up 5.1% in 2017, an acceleration from the 3.9% growth rate seen in 2016.

Aurelie Delannoy, Director of Economic Affairs at MPA, commented:

 "Given the weaker trends in mineral products sales last year, it seems hard to validate ONS's 5.1% growth in construction, let alone an acceleration in activity compared to 2016. We believe construction was weaker last year than suggested by ONS. Nonetheless our data suggests a return to growth in mineral products sales in the final quarter of the year, a welcomed development, although it is too early to say whether this is a sign of a more sustained and broad recovery in general construction work."

"As a consequence of the financial crisis, the UK economy contracted by 4.6% during 2007-09, total construction output by 15.5%, new housebuilding by 42% and mineral products markets by anything between 20% and 50%. Despite a few years of recovery and market growth since 2013, all our mineral products markets in GB remain well below pre-recession levels. Regionally, however, some striking differences emerge. Particularly, RMC sales in London in 2017 which stood 37% higher compared to 2007, whilst volumes remained depressed in all other regions. This has got to tell us something about the fragile and imbalanced state of our economy."

MPA sales volumes in GB, summary table

% Change on previous period (seasonally adjusted

*RMC is the sum of sales from both fixed & site plants.

MPA ready-mixed concrete* sales volumes by region, % change: 2017 vs. 2007

Ends.

¹ONS (2017). Gross domestic product, preliminary estimate: October to December 2017.