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News » UK » Aggregate sales indicate official data on construction output is wrong » published 8 Feb 2018

Aggregate sales indicate official data on construction output is wrong

Producers of construction mineral products saw no growth in sales in Great Britain in 2017.

Aggregate sales are a solid indicator of construction activity Above: Aggregate sales are a solid indicator of construction activity

Sales of concrete, crushed rock and sand & gravel were all flat last year. Only mortar saw any rise.

This is significant, the Mineral Product s Association (MPA) explains, because materials such as aggregates and ready-mixed concrete (RMC) are the largest elements of the construction supply chain. They are used in pretty much all types of construction work and are not generally stocked on project sites for future use. This means that the MPA’s sales volumes survey, which represents between 70% and 95% of the total GB market for these materials, is a reliable and simple indicator of construction activity.

The latest data from the Office for National Statistics (ONS) show total construction output up 5.1% in 2017, an acceleration from the 3.9% growth rate seen in 2016. Evidence from the MPA suggests we should doubt this.

Sales volumes of RMC declined by 2.6% in 2017 compared to 2016. Asphalt sales were down 0.1% and aggregates sales were down 0.4%. Mortar sales, however, enjoyed another year of strong growth, up 11.1% compared to 2016 – evidence of continued growth in house-building last year. Sluggish markets for all other materials suggest GB construction activity slowed down significantly in all other sectors through the year.

There are significant regional variations. Asphalt sales (an indicator of road building/maintenance activity) were up in England but down sharply in Scotland.

Similarly, the 2.6% fall in RMC sales was clearly driven by declines in 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.

Aurelie Delannoy, director of economic affairs at the MPA, said: “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

Q4 2017

Asphalt

RMC*

Crushed rock

Sand & Gravel

Mortar

Q4 2017 v Q4 2016

-6.0%

-5.0%

-1.3%

-3.8%

13.1%

2017 full year

0.1%

-2.6%

0.4%

-1.9%

11.1%

Annual rolling average

0.1%

-2.6%

0.4%

-1.9%

11.1%

Q4 2017 v Q3 2017 (seasonally adjusted)

0.8%

1.6%

0.5%

6.1%

6.0%

 

% Change on previous period (seasonally adjusted)

 

Asphalt

RMC*

Crushed Rock

Sand & Gravel

 

Mortar

2017

0.1%

-2.6%

0.4%

-1.9%

11.1%

2017 Q1

-2.1%

0.6%

3.4%

-1.0%

6.2%

2017 Q2

-1.9%

-5.0%

-4.0%

-6.5%

-1.9%

2017 Q3

-2.9%

-1.9%

-1.0%

-1.8%

1.5%

2017 Q4

0.8%

1.6%

0.5%

6.1%

6.0%

 

 

 

 

 

MPU

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This article was published on 8 Feb 2018 (last updated on 12 Feb 2018).

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