13 November 2009

Third Quarter Sales of Aggregates and Cement Provide Further Evidence of the Depth of the Construction Recession

Third quarter sales volume of aggregates, cement, ready mixed concrete and asphalt again fell significantly in the third quarter compared with the same period of 2008.  Aggregate and cement were around 20% down in the quarter, with ready mixed concrete down 26% and asphalt down 17%.

The market reductions have moderated from the second quarter, reflecting the lower comparative figures in the third quarter of 2008, but confirm that markets will show significant declines in 2009.  While there is evidence of some improvement in the housing market and some accelerated investment announced in the 2008 Pre-Budget Report is now finding its way into Highways Agency activity, construction markets in general are still operating at extremely low levels. MPA products are used throughout the construction industry, notably in new work sectors.

Orders for new construction work have declined by 20% in the first nine months of 2009, following a 19% decline in 2008, so construction, aggregates, cement and associated markets will remain depressed for some time. 

The CPA’s latest forecast predicts a further 2% fall in construction output in 2010 following a 15% decline in 2009 and 1% fall in 2008.  The latest MPA results indicate that the two year (2008, 2009) decline in aggregates, cement and concrete sales volumes will be around 40%, and asphalt over 20%.  Both the construction and aggregates markets are looking forward from a perspective of record declines in activity in 2009.

Simon van der Byl, Director of Public Policy at the MPA, commented ‘the length and severity of the economic and construction recessions means that Government must use the forthcoming Pre-Budget Report to reverse the current policy of cutting public investment by 50%.  Recent research* commissioned by the UK Contractors Group and CBI has confirmed that investment in construction is very effective in stimulating further economic growth and employment, and provides significant long term social and economic benefits.  There are huge amounts of spare resources available in the construction industry and supply chain and parts of our infrastructure with outstanding backlogs of work, such as highway maintenance – now is precisely the time to get on with this type of work.”

To download the quarterly construction material trends, click here.

ENDS