Sam Parkin, senior economist at BCIS, said: ‘While input costs remain high, six-year lows in brick and concrete block deliveries and sustained declines in aggregate sales speak to the broader downturn in construction activity across the market. Soft demand is keeping prices lower in the brick and concrete block markets as producers look to remain competitive, though any return in demand will likely see prices rise and those increases passed on.
‘Interest rates and the Autumn Budget, due to be set out in October, remain risks. While Bank Rate was held at 3.75%, it doesn’t rule out the possibility of further interest rate hikes in coming months which could impact the construction industry by limiting project viability and project starts. Positive spending commitments from the government could help lift the public housing sector, prompting some demand that could feed through into brick and concrete block prices. For now, though, the industry will continue to face headwinds that keep activity in some sectors muted, as reflected in official data.’
In an open letter ahead of the Autumn Budget, Mineral Products Association (MPA) chief executive Paul Adeleke recently urged Chancellor John Healey to protect capital budgets. He emphasised that, without MPA members, the government would struggle to fulfil its manifesto commitments(2).
New MPA data reinforce the decline in sales of key construction materials, with ready-mixed concrete, aggregates and mortar all reportedly well below last year’s levels.
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