MPA calls for urgent Treasury action
Association urges rapid and significant reversal of cuts in public sector investment in construction
LATEST Mineral Products Association (MPA) data on sales volumes of aggregates, asphalt and concrete in the second quarter of 2012 show significant declines in all product areas. Compared with the same period of 2011, sales of crushed rock and sand and gravel aggregates declined by 10% and 15%, respectively, while sales of ready-mixed concrete and asphalt fell by 13% and 16%.
These figures indicate that for the first half of 2012, sales of crushed rock, sand and gravel, ready-mixed concrete and asphalt were 11%, 13%, 12% and 17% down, respectively, on the first six months of 2011.
The aggregates and concrete figures, in particular, are indicative of a significant decline in construction activity, and particularly new construction activity, during 2012. The rapid decline in asphalt sales reflects a dramatic decline in road construction and road maintenance activity.
The fundamental problem is that, with some exceptions, private sector construction has declined this year and the impacts of the reductions in public investment in construction are now being felt in full. Even infrastructure work is declining due to a collapse in road construction over the past 12 months.
Office for National Statistics (ONS) data show that road construction in the first quarter of 2012 was more than 40% lower than the average level of activity recorded throughout 2010 and 2011). ONS data on construction output show a 5.4% reduction in the year to May, and the MPA’s data suggest that second-quarter construction output will be well down on 2011.
However, a number of major regional variations are apparent. For example, ready-mixed concrete sales have remained stable this year in London and in some other parts of the South East following the strong growth recorded in 2011, but elsewhere in Great Britain markets are generally extremely depressed.
According to the MPA’s director of economics, Jerry McLaughlin (pictured), the dire second-quarter results reflect the general market experience that construction activity has declined significantly in 2012.
‘We are extremely concerned that there are few positive indicators in the market and our industry volumes are likely to decline this year to below the levels experienced in the depths of the 2009 recession,’ he said. ‘We are also expecting further declines in construction and mineral products markets in 2013.
‘These trends will inevitably cause construction to be a continuing drag on GDP growth throughout the year and into 2013 unless there is a rapid and significant reversal of cuts in public sector investment in construction.
‘The announcements made by government to support and encourage private investment in infrastructure projects are welcome and important, but will not have any significant impact on construction activity before 2014. Urgent action is necessary if we want construction to contribute positively to economic recovery over the next 18 months,’ said Mr McLaughlin.
