The output of the non-metallic minerals sector grew by 6%, which was among the largest gains across manufacturing. Also, the rise was the first in more than a year. Similarly, that of metal products was up by 3% after falling for two quarters in a row.
The main types of non-metallic minerals include glass, cement, and plaster. Key metal products include structural frameworks for buildings, and the treatment and coating of metals such as plating.
At first glance, the strength of the two sectors seems at odds with the total volume of all construction work taking a dive in the three months to March. The performance of both sectors typically follows that of construction because a number of non-metallic mineral, and metal product, manufacturers are embedded in its supply chain.
Digging a little deeper provides a likely explanation. The weakness of construction was largely driven by repairs and maintenance, and infrastructure. In contrast, housing construction posted strong growth for the second quarter in a row. The recent improvement in housing appears to have underpinned demand for non-metallic minerals and metal products.
Another explanation could be an increase in demand from Europe. Some of the top destinations for both non-metallic minerals and metal products are countries in the eurozone. There are signs that the region’s economic recovery has gained momentum, with GDP growth picking up to 0.6% in the first quarter, the strongest in five years.
Is it a one-off?
The outlook for housing construction and/or exports to the eurozone supporting the non-metallic minerals, and metal products, sectors in the coming quarters is favourable. Government measures are underway to boost the supply of new housing in the UK, particularly in London and South-East England. Also, the recent stronger growth in the eurozone should help improve the labour market, supporting residential construction across the Channel.
An official report out next week will provide a first look at how construction, including that of housing, fared at the start of the second quarter.