Construction market demand in the UK for mineral products was higher in the first three months of this year compared with the previous quarter, providing some evidence of continued impetus in construction activity at the start of the year, according to the Mineral Products Association (MPA).
Sales of aggregates grew by 2.1 per cent in 1Q17 compared to the previous quarter and ready-mix concrete by a positive but more subdued 0.7 per cent. Mortar sales accelerated further after the strong performance seen at the end of 2016, with volumes up 6.6 per cent in 1Q17. 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 MPA notes. The volume of asphalt sales by contrast declined by 0.8 per cent in 1Q17.
The trade association noted that overall its 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 per cent compared to the previous year, five per cent for aggregates volumes and 4.3 per cent for ready-mix concrete. Mortar sales, the strongest market, grew by 6.9 per cent over the period, it highlighted.
The MPA also underlined that 10 months after the outcome of the EU referendum, it is clear that its markets and the construction sector "have shown more resilience than expected." However, it stressed that nonetheless there remains 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, a statement by the MPA pointed out.
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," she added.
