Demand for heavy side building materials in Great Britain, including aggregates, asphalt, ready-mixed concrete and mortar, has been weak throughout 2019. With demand failing to pick up again in the final quarter of the year, sales volumes for these materials were lower in 2019 compared to 2018, down 3.9% for ready-mixed concrete, -2.2% for aggregates, -1.7% for mortar and -0.8% for asphalt.
Declining markets provide tangible evidence of weakening UK construction activity, corroborating a range of business surveys. Mortar is mainly used in housebuilding. Sales volumes for this material declined by 8.6% in the final quarter of 2019 compared to the previous quarter, the sharpest quarterly fall since mid-2012. Mortar sales volumes have now declined in six of the last eight quarters, a clear indication of housebuilding activity running out of steam.
Building materials such as aggregates and ready-mixed concrete are used in most construction projects, mainly early in a project's timeline, providing the foundation and structure to houses, retail and office blocks, hospitals, schools, railways and roads. Falling demand for these products indicates that ongoing construction work most likely focuses on existing and finishing sites rather than new ones, and a further slowdown in activity cannot be ruled out over the next few months.
Ready-mixed concrete sales have now declined for three consecutive years, driven by weak demand in London and the South East, where both housebuilding and commercial construction work slowed. There were nonetheless some brighter spots in the West Midlands and the South West throughout the year, where ready-mixed concrete sales have been supported by infrastructure work, including HS2 enabling works and Hinkley Point C.
Linked to general road activity, growth prospects for asphalt sales in recent years have been geared primarily toward supplying for the Highways England's 5-year Road Investment Strategy programme, which originally included 112 projects to be completed over 2015-2020. However, continued delays due to management and funding issues have impacted on project delivery, and, as a result, asphalt sales volumes in 2019 remained broadly flat since 2016.
The prospects for heavy side building materials markets in 2020 remain weak, explains Aurelie Delannoy, Director of Economic Affairs at the Mineral Products Association. All indicators suggest that UK construction and its supply chain will have to wait for 2021 for growth to slowly resume, provided work in the roads, rail and energy sectors accelerate as planned. However, uncertainty lingers on unnecessarily for key infrastructure projects such as the long-awaited HS2, for which the industry has called on the Prime Minister to make a firm and swift decision and give the mineral products industry more confidence to invest and, in turn, boost growth. Meanwhile, the economic and political uncertainty generated by the Brexit process have stifled private investment in the sector in the past three years. Despite the recent breakthrough in the negotiations of the Withdrawal Agreement, this may continue as the negotiations about future trade unfold and the risk of a 'No Deal' remains to the end of 2020.
Building materials sales volumes in GB (seasonally adjusted)
||Sand & Gravel
||ONS Construction Output
(1) RMC is the sum of sales from both fixed & site plants.
(2) Following the recent addition of new respondents to the survey sample, mortar sales have been revised back to 2012Q1 to ensure consistency of the dataset.
For further information, please contact Elizabeth Clements at Elizabeth.Clements@mineralproducts.org.