Construction decline in 2013 but growth in 2014 according to Spring 2013 CPA forecasts

Construction output is set to fall by more than 2% this year following an 8% contraction in 2012, according to the Spring edition of the Construction Products Association’s Industry Forecasts for 2013-2017. A recovery is anticipated in the medium-term with growth of 1.9% in 2014 and 3.8% in 2015.

The full forecasts can be downloaded by logging in to the BWF website below. The main points of the forecast can be summarised as follows:

• According to the Association’s central forecast, total construction output is expected to contract 2.1% in 2013, before growing 1.9% in 2014, and 3.8% in 2015.
• Private housing is estimated to grow by 2.0% this year, forecast to grow a further 5.0% next year and 7.0% in 2015.
• Public housing is expected to contract both in this year and next, by 6.0% and 2.0%, respectively, but return to growth (3.0%) in 2015.
• Public non-housing is estimated to face the largest decline of all sectors, by 14.0% during the course of 2013, and then by a further 2.5% next year. By 2015 modest growth (1.0%) is expected to return to the sector.
• Infrastructure is anticipated to show the strongest growth out of the major sectors, 2013 is estimated to grow 6.6%, thereafter, 2014 is forecast to grow 7.6% and in 2015 7.2%.
• Industrial is expected to grow in 2013, 2014 and 2015 by rates of 2.5%, 3.7% and 4.4%, respectively.
• Commercial, the largest sector, is estimated to decline in 2013, by 6.6%, and then in 2014 a further 0.8%. Growth of 2.8% is expected to return in 2015.
• Total R&M work is expected to be broadly flat (-0.3%) in 2013, before growing at rates of 1.5% in 2014 and 2.5% in 2015.

Noble Francis, Economics Director of the Construction Products Association, commented:
‘The industry lost £9 billion of activity last year and these latest forecasts anticipate a further £2 billion loss in 2013. This fall is primarily due to the lack of private sector investment and the continuing bite of public sector spending cuts. Conditions were exacerbated by poor weather during the first quarter.

‘Of most concern is the fall in output in private commercial, the largest construction sector, which fell 10% last year and is estimated to fall a further 7% in 2013.

‘Despite this, we are already encouraged by signs of improved market activity, primarily driven by private housing and infrastructure. We anticipate that government policies such as Help to Buy will boost private housing, which is expected to rise 19% in just two years. Infrastructure activity is set for 7% growth in 2013, boosted primarily by rail construction such as Crossrail, Europe’s largest project, and station refurbishments around the country.

‘Overall, 2013 is anticipated to be extremely challenging. From 2014 prospects are brighter for the industry, but the key risk is the extent to which government announcements feed through to activity on the ground.’

This information is courtesy of the Construction Products Association.  Through your membership of the BWF you can access a range of detailed construction related data.  To find out more, why not visit: https://www.constructionproducts.org.uk/economics/