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2012 aggregate sales set to be even worse than 2009

23 Jul 12 Sales of aggregates, asphalt and concrete fell so strongly in the second quarter of 2012 that the industry fears 2012 could be even worse than 2009 when the recession was at its deepest.

Mineral Products Association data show that in the second quarter, compared with the same period of 2011, sales of crushed rock and sand and gravel aggregates declined by 10% and 15% respectively. Sales of the value-added products of ready-mixed concrete and asphalt fell by 13% and 16% respectively.

These figures indicate that for the first half of 2012 sales of crushed rock were down 11%, sand and gravel down 13%, ready mixed concrete down 12% and asphalt down 17%.

The aggregates and concrete figures in particular are indicative of a significant decline in construction activity, the MPA said, particularly new construction activity. The decline in asphalt sales reflects a decline in road construction and road maintenance activity. ONS data shows road construction in the first quarter of 2012 was more than 40% lower than the average level of activity recorded throughout 2010 and 2011.

ONS data on construction output shows a 5.4% reduction in the year to May and the MPA data suggests that second quarter construction output will be well down on 2011.

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The MPA also sees major regional variations. Ready mixed concrete sales have remained stable this year in London and in some other parts of the southeast following the strong growth recorded in 2011, but elsewhere markets are generally extremely depressed.

MPA director of economics Jerry McLaughlin said: “The dire results in the second quarter reflect the general market experience that construction activity has declined significantly in 2012. We are extremely concerned that there are few positive indicators in the market and our industry volumes are likely to decline this year below the levels experienced in the depths of the 2009 recession. We are also expecting further declines in construction and mineral products markets in 2013.

“These trends will inevitably cause construction to be a continuing drag on GDP growth throughout the year and into 2013 unless there is a rapid and significant reversal of cuts in public sector investment in construction. The announcements made by government to support and encourage private investment in infrastructure projects are welcome and important, but will not have any significant impact on construction activity before 2014. Urgent action is necessary if we want construction to contribute positively to economic recovery over the next 18 months.”

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