The Construction Products Association is predicting further growth for the construction industry, including a 13.6% rise in infrastructure in 2015.
However, theCPA’s latest forecast for overall construction growth reflects a downward revision since the summer owing to a slowdown in third quarter housing and commercial activity.
Construction output is expected to increase 3.6% and 3.8% in 2015 and 2016, respectively, revised down from 4.9% and 4.2% in the Summer Forecast. The slowdown in Q3 activity is expected to be temporary and construction output is expected to rise by 19.7% between 2015 and 2019, driven by growth in the three largest construction sectors; private housing, commercial and infrastructure.
Highlights from the forecasts include:
- Infrastructure output is forecast to rise 13.2% in 2015 and 7.6% in 2016
- Total construction output is forecast to rise 3.6% in 2015 and 3.8% in 2016
- Private housing starts are anticipated to rise 7.0% in 2015 and 5.0% in 2016
- Public housing starts are expected to fall 10.0% in 2015 and 5.0% in 2016
Key risks include skills shortages and government austerity
Dr Noble Francis, Economics Director, commented:
“We remain positive about prospects for the construction industry. The slowdown in Q3 activity is expected to be temporary and construction output is expected to rise by 19.7% between 2015 and 2019, driven by growth in the three largest construction sectors; private housing, commercial and infrastructure.”
“Infrastructure activity continues to thrive. Output in the sector is forecast to grow 11.2% on average per year between 2015 and 2019, supported in large part by the £411 billion National Infrastructure Plan. The roads and energy sub-sectors will be strongest but work is forecast to increase throughout the forecast period in all key sub-sectors; roads, energy, rail, water and sewerage.”
However, Dr. Francis is warning that while growth prospects in construction remain positive, there are significant risks. He continued:
“Government austerity focuses on current spending rather than capital investment but the risk remains that if government cannot reduce current spending as much as it anticipates, it may cut public construction projects to achieve its aims of eliminating the public sector deficit.”
“In addition, within the construction industry, the key concerns regard skills shortages, which have already been reported in the housing sector but may become more prevalent across the wider industry over the next 12-18 months due to the forecast growth.”
The Construction Products Association represents the UK’s manufacturers and distributors of construction products and materials. The sector directly provides jobs for 313,000 people across 21,000 companies, and has an annual turnover of more than £50 billion.
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