Construction in Great Britain contines to decline, warns MPA

Construction in Great Britain contines to decline, warns MPA
09 August 2023

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 per cent in 2Q23, compared to the previous quarter, while primary aggregates (crushed rock, sand and gravel) declined by 3.7 per cent, with ready-mixed concrete down by 5.2 per cent and mortar falling by 6.4 per cent.

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.

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 per cent fall in the last 12 months. Meanwhile, infrastructure output has remained relatively stable, but delays and overspending in road projects have cooled demand for asphalt. Major road projects overseen by National Highways are also heavily impacted by costs, planning delays and changes in government priorities.

The MPA forecasts that sales volumes for all markets monitored will contract in 2023 – marking the second consecutive year of decline – driven by uncertainties surrounding the economic outlook and the higher cost of funding due to rising interest rates.

Published under Cement News