13 August 2009

Further Substantial Fall in Second Quarter Sales as MPA calls on Government to Reverse Planned 50% Cut in Public Investment

Aggregates, Cement, Asphalt and Ready-mixed concrete volumes again fell sharply in the second quarter of 2009 as the construction recession intensified.

Compared with the same period of 2008, sales volume of crushed rock and sand and gravel aggregates fell by 29% and 27% respectively, cement and ready-mixed concrete by 32% and 37% respectively, and asphalt by 27%.

These rates of decline are broadly similar to the first quarter, and are likely to moderate slightly in the second half of the year as industry demand dropped dramatically in the third and fourth quarter of 2008, so the comparative base is reduced.

MPA Executive Director Simon van der Byl said “These are awful numbers and the market decline we see in 2009 will be the worst since records began. 2009 is also likely to show the biggest annual reduction in construction output in the post WW2 period and the lowest number of housing starts since 1924, highlighting the unprecedented market conditions our industry and other material suppliers are operating in.

Recent forecasts (e.g. CPA) predict further decline in construction activity in 2010 and a very slow subsequent recovery. 

In these circumstances, Government should be planning to sustain much needed investment in our infrastructure and public services to underpin the Economy and utilising the huge spare capacity available in the construction and materials industries and supply chains.  Instead, the Budget set out a 50% reduction in public net investment over the next four years.”

Simon van der Byl added “it is hugely disappointing that a Government which took decisive actions to support the financial sector is not prepared to use a fraction of those sums to sustain investment when it is most needed.  The resources of our sector and the rest of the construction industry will be wasted unless there is a far more positive approach to investment by the Government as economic recession moves towards a fragile recovery.”

To view the trends graphs, click here.

ENDS