An ongoing drop in sales of mineral products underlines the scale of the challenges facing construction, a sector body has warned, adding that weak demand is likely to persist in 2024.
In the third quarter (Q3) of 2023, there were “notable declines” in demand for ready-mixed concrete (15 per cent) and sand and gravel (12.2 per cent), according to new data from the Mineral Products Association (MPA), while mortar sales dipped by 8.7 per cent.
The MPA said that the drop in ready-mixed concrete sales was comparable to the first quarter of 2009, “when macroeconomic and construction conditions were severely impacted by the global financial crisis”.
The association said the survey “reveals the extent of the slowdown in housebuilding activity, compounded by continuing delays in key infrastructure projects, particularly in roads, as a result of persisting cost pressures and planning challenges”.
While the most recent data shows “pockets of regional growth” in the East of England and the South East, the MPA added that demand for all mineral products it monitors “has been on a declining trend for most of the past 18 months”.
The association said that growth in demand for products due to major infrastructure programmes such as HS2 phase one had been “more than offset by a weakening overall pipeline”. In addition, investment in projects has suffered from a “triple whammy” of cost inflation, rising interest rates and reduced business and consumer confidence.
In highlighting the “deepening challenges for construction”, the MPA said markets had been impacted by “repeated delivery setbacks” to road network upgrade schemes managed by National Highways.
The association said that while activity had slowed generally in the sector over the past year, there had been a “particularly marked slowdown” since mid-July as housing demand continued to drop off.
The MPA concluded that its latest results suggest “the ongoing pressure on construction activity shows little sign of abating”.
MPA director of economic affairs Aurelie Delannoy said: “Faced with persistent headwinds, the construction industry and its supply chain, including mineral products manufacturers, is in the midst of a challenging period.
“The decline in sales volumes for materials such as concrete and mortar reflects the broader issues faced by the sector, in particular the acute slowdown in housebuilding activity. MPA members do not foresee any improvement in market conditions in the near-term, with weak construction demand likely to persist throughout most of 2024.”
Delannoy said that while the industry was hopeful there would be measures to support growth and strengthened commitment to infrastructure projects in November’s Autumn Statement, “the typical lag between policy announcements and projects actually starting means that tangible improvements in market conditions for producers of mineral products are unlikely to materialise next year”.
