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The MPA indicates continued impetus in UK construction

Published by , Assistant Editor
World Cement,

According to the MPA, the UK construction market demand for mineral products was higher in 1Q17 than in the previous quarter, providing some evidence of continued impetus in construction activity at the start of the year. Mineral products, such as aggregates and ready-mixed concrete (RMC), are major elements of the construction supply chain, particularly in the earlier stages of projects, so the MPA results point to a sustained level of construction activity on the ground.

Sales of aggregates grew by 2.1% in 1Q17 compared to the previous quarter, and RMC by a positive but more subdued, 0.7%. Mortar sales accelerated further after the strong performance seen at the end of 2016, with volumes up 6.6% in 1Q17. Mortar sales are closely linked to housebuilding and the rapid growth of this market since last summer suggests that housing remains the primary driver of construction activity. The volume of asphalt sales by contrast declined by 0.8% in 1Q17.

Overall sales volumes for the year finishing March 2017 indicated healthy growth rates across all major MPA construction minerals, with asphalt up 5.2% compared to the previous year, 5% for aggregates volumes and 4.3% for RMC. Mortar sales was the strongest market, growing by 6.9% over the period.

Ten months after the EU referendum, the construction sector and MPA markets are both showing more resilience than expected. There does however, remain one reoccurring issue for asphalt producers: while 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.

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.”

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UK cement news Construction news