Muted ONS construction figures for 2016 contrast with MPA market data
MPA market data indicates more resilience in construction sector than ONS figures suggest.
The ONS data published yesterday, which covers construction output up to November 2016, shows that construction activity declined for two consecutive months in October and November, after a fall by 0.8% in the third quarter. Extrapolating for December, this suggests growth in construction output close to 1.5% for the year as a whole, driven by private new housing and commercial buildings. This is a significant slowdown compared to 2015, when construction grew by 4.9%.
These muted construction figures for 2016 contrast with MPA market data, which so far indicate more resilience in construction activity that shown in official statistics. Materials such as ready-mixed concrete (RMC) and aggregates are used across all major construction sectors, particularly in the earlier stages of projects, and therefore provide hard evidence of work happening on the ground. The MPA sales data for RMC and aggregates increased by 4.6% and 4.3% respectively in the year to September 2016. This compares to growth of 4.3% and 4.9% respectively seen in 2015. Mortar sales, more closely related to housing activity, stood 3.8% up in the year to September 2016.
Aurelie Delannoy, Chief Economist at MPA commented: “In the past two years, we have observed systematic upward revisions of ONS data for construction in their subsequent releases; further upward revisions on the current estimates for 2016 as a whole might still be expected, given the strength of our markets. The feedback we receive from our companies is that activity is so far holding up well. There is nonetheless a certain degree of caution, notably with regards to 2017, when the weaker outlook for business investment and real wage growth following the decision to leave the EU is expected to constrain construction activity.”
MPA is currently collecting its construction material sales volumes for 2016Q4, which will be published at the end of January.
