MPA: positive 2Q14 sales point to second-half construction improvement

Following the significant improvement in UK sales volumes of mineral products from mid-2013, the latest Mineral Products Association (MPA) data indicate further improvement in the first half of 2014.

Compared to 2Q last year, crushed rock was the fastest growing market (up by nine per cent), whilst both asphalt and sand and gravel were four per cent higher. Ready mixed concrete sales fell 3.2 per cent over the period, but the decline should be viewed in the context of the very high volumes seen last year and the underlying market trends remain positive.

Whilst last year’s results were stronger than anticipated, the MPA data indicates further growth in 2014 although more modest and stabilising. However even with three per cent growth trends markets would not regain pre-recession levels until after 2020.

Provisional GDP figures indicated a fall in construction activity by 0.5 per cent in the second quarter, reducing overall economic output by 0.03 per cent. However, sales of MPA materials should be an early indicator of official construction output data and construction activity is therefore expected to improve again during the third quarter of this year year.

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. If the necessary increase in housing starts can be delivered and promised infrastructure investments are implemented, we should see further improvements in industry markets. But this will of course depend on potential economic headwinds and political uncertainties that lie ahead.

“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 Southeast, 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.”