Growth in second quarter aggregates markets reflects housebuilding improvement and suggests construction activity may be near the bottom of the downward cycle
MPA survey results show a significant improvement in sales of aggregates, ready mixed concrete and asphalt in the second quarter. Following a poor first quarter, second quarter sales volumes increased by 14% for crushed rock aggregates, 9% for sand and gravel aggregates, 18% for ready-mixed concrete and 9% for asphalt, all compared with the same period of 2012.
These figures represent welcome improvements but also reflect some carry over of work from the first quarter due to bad weather and comparisons with a very poor second quarter of 2012.
For the underlying market change, the moving annual trend figures (i.e. the year to June 2013 compared with the year to June 2012) provide a better guide. These figures have been improving in recent months and the overall aggregates moving annual trend for June is -1% (comprising a 2% increase in crushed rock and 6% decline for sand and gravel), providing an indication that construction activity may be close to the bottom of the decline which started in mid 2011.
There is evidence that private housebuilding has picked up significantly from the extremely low levels of activity in 2012, but there remain many depressed areas of construction. The sharp distinction in June moving annual trends between the no change outcome for ready-mixed concrete and the 12% decline for asphalt sales volumes, for example, highlights that road markets remain constrained following the 41% decline in road construction in 2012.
Jerry McLaughlin, Chief Economist MPA, commented, “Private housebuilding has improved, but this sector represents only 14% of construction and it is sobering to see the latest GDP figures showing that construction output in the first half year was 4% lower than the same period of 2012. However, the better MPA figures suggest that more construction work is underway and that this market should flatten out during 2013. For a sustained recovery, however, we need Government to deliver fully on the infrastructure commitments made in the 2012 Autumn Statement and for the increased confidence in the housing market to spread to other construction sectors.”
