Australia: Cement Rising, Bricks & Tiles Falls Back

In a further indication that the two-speed nature of the construction industry is reflecting on the manufacturing sector, the latest data shows that cement production in Australia is running hot while manufacturing activity for bricks and tiles remains weak.

In the first quarter of this year, data from the Australian Bureau of Statistics indicates strong levels of activity in cement manufacturing. Compared with the same quarter last year, production of Portland cement rose by 12 per cent in the March quarter while that of Portland cement clinker was up by 5.3 per cent.

This increase, however, was not the case for bricks and tiles.  Production of clay bricks for structural purposes was down 13.8 per cent compared with the March quarter last year while clay bricks other than for structural purposes dropped 37.6 per cent over the period and concrete brick, block and paver production fell 12.5 per cent. In roofing materials, meanwhile, production of terracotta roofing tiles was down nearly 30 per cent while that for concrete tiles was down 9.5 per cent.

The latest data illustrates how the two-speed nature of the construction industry is flowing back to manufacturers of construction materials. Because of its use in roads, where construction activity is increasing modestly but steadily, cement manufacturers have been spared much of the impact of weak building conditions while makers of bricks and tiles have seen a downturn.

Moreover, the weakness in manufacturing of tiles may be a particular sign of specific weakness in the roofing industry. The latest HIA Trades report, for example, indicated a significant oversupply of tradespeople in the roofing trade, though the same report found an undersupply in the ceramic tiling trade.

Overall Production Rising

Whilst the ABS report provides an excellent breakdown of production levels regarding individual types of construction materials, it does not provide any indication as to whether production of construction materials is rising or falling.

The best guide for that information is the monthly Performance of Manufacturing Index published by Australian Industry Group and accounting firm PwC.

That report shows in an increasingly brightening picture. Following subdued activity over the summer, last month’s PMI showed manufacturing activity in construction materials growing strongly even as manufacturing activity in other sectors fell into decline.

What the latest ABS report does appear to show, however, is that there are substantial differences in manufacturing activity across different materials used in the sector.

Overall, construction manufacturing is back on the rise, but some materials are in greater demand than others.

Source Designbuildsource By Andrew Heaton