New figures from the Mineral Products Association (MPA) provide more concrete evidence of the slowdown in Britain’s construction industry.

The latest quarterly survey from the MPA – covering aggregates, asphalt, ready-mixed concrete and mortar in Great Britain – reveals a decline in actual sales volumes during the second quarter of 2023.

The drop in construction activity, particularly in new housing, along with the impact of cost inflation on other areas such as roads, has contributed to the decrease in demand for these essential ‘heavyside’ materials.

According to the MPA survey, which provides data stretching back over 20 years, asphalt volumes experienced a drop of 3.1% in 2023Q2 compared to the previous quarter, while primary aggregates (crushed rock, sand and gravel) declined by 3.7%, with ready-mixed concrete down by 5.2% and mortar falling by 6.4%.

Over the past year, the data shows that construction mineral products have seen a significant decline in demand, as the initial pent-up activity from the pandemic subsided and economic challenges surfaced. Although there was a robust rebound in 2021, which propelled asphalt and crushed rock sales to their highest levels in over a decade, the impact of inflation, rising interest rates, and weaker business confidence has slowed new construction project starts and led to a renewed decline in demand for heavy-side building materials.

Various factors have contributed to the decline in demand according to the MPA. Construction materials cost inflation may have slowed from a peak in mid-2022, but the cumulative effect of high costs and higher interest rates over the past 18 months continues to weigh heavily on the financial viability of projects and on housing affordability. Additionally, labour constraints throughout the construction supply chain have contributed to the overall challenges faced by the sector.

Housing
The official construction data from the Office for National Statistics indicates a moderation in construction output in recent months, with new housing being one of the sectors to experience significant decline. Mortar sales volumes, which are primarily linked to the early stages of new housing developments, saw a 5.1% fall in the last 12 months. With little sign of a revival in housebuyers’ and housebuilders’ sentiment, mortar demand is expected to slow further over the next few months, despite Government’s recently celebrating meeting its latest pledge to build 1 million new homes over this Parliament, and raising aspirations to do more through planning reforms and prioritising inner city projects in the next.

Infrastructure
Infrastructure output has remained relatively stable, but delays and overspending in road projects have cooled demand for asphalt. Asphalt producers are at the forefront of local authories’ budget pressures, which are forcing them to scale back on local road improvement and maintenance plans. Major road projects overseen by National Highways are also heavily impacted by costs, planning delays and changes in Government priorities. By contrast, major infrastructure projects such as HS2 and Hinkley Point C have continued to support the requirement for aggregates as fill materials, and for ready-mixed concrete.

The MPA survey serves as a critical bellwether of current and near term construction trends, offering valuable insights into market activity concerning heavy-side building materials. These materials are the backbone of any construction project, forming the foundations and structures for roads, railways, housing, commercial and industrial developments. They also tend to be used early in construction projects timeline; the most recent results therefore suggest construction output is likely to remain under pressure over the coming months.

MPA forecasts that sales volumes for all markets monitored will contract in 2023 – marking the second consecutive year of decline. Clients in the construction sector are cautious about signing off new projects, given the uncertainties surrounding the economic outlook and the higher cost of funding due to rising interest rates.

Aurelie Delannoy, Director of Economic Affairs at MPA, commented: "The latest MPA survey clearly illustrates the current challenges faced by the construction industry and its supply chain, including mineral products manufacturers. The decline in sales volumes for essential materials like asphalt, aggregates, ready-mixed concrete and mortar reflects the slowdown in key construction sectors, including housing. As we navigate these headwinds, the industry and policymakers must remain focused on addressing longer-term challenges and seizing opportunities, particularly in delivering crucial policy ambitions for housing and infrastructure.

“However, the Government's propensity to over-promise and under-deliver presents a clear roadblock. Recent records show a pattern of grand policy statements and targets followed by repeated U-turns, project delays, a lack of clarity on material needs related to infrastructure and housing plans – all in the context of a persistently challenging economic and political environment. Such an approach hampers investment decisions and business operations. It is high time to prioritise UK growth."

Figure 1. Mineral products sales volumes in Great Britain, 2012Q1-2023Q2

Table 1. MPA sales volumes in GB: change on the previous period (seasonally adjusted)

* Ready-mixed concrete sales volumes at GB level cover sales from both fixed and site (mobile) plants.

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About the Mineral Products Association:

The Mineral Products Association (MPA) is the trade association for the aggregates, asphalt, cement, concrete, dimension stone, lime, mortar and industrial sand industries. With the merger of British Precast, and affiliation of the British Association of Reinforcement (BAR), the British Calcium Carbonate Federation, the Cement Admixtures Assocation (CAA), CONSTRUCT, Eurobitume, MPA Northern Ireland, MPA Scotland and the UK Quality Ash Association (UKQAA), it has a growing membership of 520 companies and is the sectoral voice for mineral products. MPA membership is made up of the vast majority of independent SME quarrying companies throughout the UK, as well as the 9 major international and global companies. It covers 100% of UK cement and lime production, 90% of GB aggregates production, 95% of asphalt and over 70% of ready-mixed concrete and precast concrete production. In 2018, the industry supplied £16 billion worth of materials and services to the Economy. It is also the largest supplier to the construction industry, which had annual output valued at £172 billion in 2018. Industry production represents the largest materials flow in the UK economy and is also one of the largest manufacturing sectors.

For media enquiries, contact Elizabeth Clements at: Elizabeth.Clements@mineralproducts.org