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12 November 2010

MPA Quarter 3 Sales Trends Flatter to Deceive

Sales of aggregates, asphalt, cement and ready mixed concrete improved in the third quarter of 2010 compared with the same period of the previous year.  Aggregates, cement and ready mixed concrete, reflecting a broad range of construction activity, were 3%, 9% and 6% higher respectively than in 2009. However 2009 was a historic low point therefore any uplift must be regarded as a comparative improvement as opposed to a sustained recovery.

Compared with the second quarter of 2010, the third quarter volumes were relatively steady.

In comparison, Government has published data indicating that construction output increased by 10% in the second quarter and a further 4% in the third quarter, underpinning the stronger than expected GDP growth figures of 1.2% and 0.8% recorded in the second and third quarters.  These official figures simply stated would suggest that the level of construction output in the UK is now at an all time high but nothing could be further from the truth.  The data from the MPA and more general feedback from the construction and materials sectors suggest that official construction data may be overstating the real position.

Asphalt sales have improved most throughout the year, with a 9% improvement over 2009.  MPA expected growth in this market in 2010 due to the need to repair the significant winter damage to the road network and the progress of a number of major schemes, but the scale of the improvement implies that local authorities have increased focus on road maintenance work.

MPA Executive Director, Simon van der Byl, emphasized that both the MPA and wider construction improvements recorded need to be viewed in the context of likely declines in construction activity in 2011.  Simon van der Byl said, “Everyone needs to take great care in interpreting construction related data for 2010 to date.  Firstly the figures only reflect a welcome comparative improvement and secondly the 21% cut in public investment set out in the Comprehensive Spending Review will mean substantial reductions in construction sectors such as health education and roads and will put huge pressure on local authority spending. 

“These negative pressures are likely to outweigh what will probably be a slow and uneven recovery in housing, commercial and other private sector construction over the next two years.  In the longer term the private sector and infrastructure projects should deliver strong construction growth, but prospects for 2011 look very depressed.  The possibility that many construction materials sectors and construction in total may experience a double dip recession during 2011 and beyond cannot be ruled out.”                              

ENDS

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