A continued fall in sales of mineral products underscores the scale of the challenges facing construction, a trade body has warned, adding that weak demand is likely to persist into 2024.
In the third quarter (Q3) of 2023, there were “notable declines” in demand for ready-mixed concrete (15%) and sand and gravel (12.2%), according to new data from the Mineral Products Association ( MPA), while mortar sales fell 8.7 percent.
The MPA said the fall in ready-mix concrete sales was comparable to the first quarter of 2009, “when macroeconomic and construction conditions were hit hard by the global financial crisis.”
The association said the survey “reveals the extent of the slowdown in housebuilding activity, exacerbated by continued delays in key infrastructure projects, particularly roads, as a result of cost pressures persistent and planning challenges”.
While the latest figures show “pockets of regional growth” in the East of England and the South East, the AMP added that demand for all the mineral products it monitors “has been on a downward trend down for most of the last 18 months.”
The association said growth in product demand due to major infrastructure programs such as the first phase of HS2 had been “more than offset by a general weakening of the pipeline”. In addition, investment in projects has suffered a “triple hit” of cost inflation, rising interest rates and reduced business and consumer confidence.
Highlighting “deepening construction challenges”, the MPA said markets had been hit by “repeated setbacks in the delivery” of road network improvement schemes run by National Highways .
The association said that while activity had generally slowed in the sector over the past year, there had been a “particularly marked slowdown” since mid-July as housing demand continued decreasing
The AMP concluded that its latest results suggest that “continued pressure on construction activity shows little sign of abating”.
AMPA Director of Economic Affairs Aurelie Delannoy said: “Faced with persistent headwinds, the construction industry and its supply chain, including mineral product manufacturers, are in the midst of a difficult
“The fall in sales volumes for materials such as concrete and mortar reflects the wider issues facing the sector, in particular the sharp slowdown in house building activity. AMP members do not foresee any improvement in market conditions in the near term, with weak construction demand likely to persist through most of 2024.”
Delannoy said the industry expected there would be measures to support growth and a strengthened commitment to infrastructure projects in November’s autumn statement.
But he added that “the typical lag between policy announcements and projects actually starting means that tangible improvements in market conditions for mineral producers are unlikely to materialize next year.”
