Construction rebound to be stronger than first forecast

Aaron Morby 5 years ago
Share

A stronger rebound in commercial building is forcing industry crystal ball gazers to rewrite construction growth forecasts for the next two years.

In its latest forecast, the Construction Products Association now believes output will rise 3.4% and 5.2% this year and next. That is well ahead of the 2.7% and 4.6% forecast just three months ago.

A stronger recovery in London office projects and larger retail schemes coming through the pipeline are expected to fuel faster growth.

This will build on rises in private house building and infrastructure work that will deliver strong growth for at least four years.

cpa forecast january 2014

Dr Noble Francis, Economics Director of the Association, said: “The construction industry is in a very different place to just one year earlier, when output fell to a level 15.4% below its pre-recession peak.

“Output in the largest construction sector, private commercial, fell 33.1% between 2008 and 2012.

“In 2013, however, major office projects in London have proved sizeable enough to start a recovery in the sector.”

He said that office work in the third quarter of 2013 had increased on an annual basis by 21.7%, the largest increase since 2007.

This was the result of a sooner than expected pickup in the South East market, which, at the start of 2013 had shown signs of slowing.

Overall commercial activity is expected to grow 2.7% this year following growth of 2.4% in 2013.

Dr Francis added: “In the second half of 2013, the infrastructure sector was a key driver of construction growth, with output in the sector forecast to increase 39.7% by 2017.”

This will be driven by a recovery in the roads work where output fell by more than half in two years, combined with further growth in rail construction.

He added: “In the medium-term, from 2015, infrastructure is also expected to be supported by double-digit growth in the energy sub-sector due to main works on the first of the new nuclear reactors at Hinkley Point C.”

He said that housing starts in Great Britain last year are estimated to have increased 24% and further growth rates of 16% this year and 10% next year are forecast.

“This private housing growth has been driven by wider economic recovery and government’s Help to Buy policy.

“While initial concerns were that this policy would fuel house price inflation, but clearly both house prices and house building have risen significantly.

“After 2015, without Help to Buy to support housing market demand, there are strong concerns about whether house building will continue to improve despite the clear need for new housing.

“As a consequence, the Association’s forecasts anticipate the growth in private housing starts slowing in 2016.”

Other forecast highlights

  • Office work to grow 10% in 2015 and 7% thereafter in 2016 and 2017
  • Public housing starts to rise 2.0% in 2014 and 2015 before marginal growth thereafter as government focuses on affordable, not social, housing
  • Retail output growth of 2.0% is forecast in 2014, with 5.0% rises expected in 2016 and 2017
  • Factories growth of 6.0% is forecast for 2014; thereafter, 5.0% per year growth is projected until 2017
  • Warehouses sub-sector output is forecast to rise 10.0% in 2014 and 8.0% in 2015

Latest news

Pay row set to escalate on HS2 enabling works site

Dispute set to intensify over rates paid by labour supplier
1 day ago

VINCI starts work on new £100m Birmingham hospital

Contractor gets underway on three-year build programme
23 hours ago

Four civils firms scoop £2.6bn flood and coastal framework

Kier breaks into Environment Agency preferred contractors list
1 day ago

Costain making engineers redundant at tech centre

Contractor cutting jobs at technology division it bought for £17m in 2016
1 day ago

Dozen firms win £500m City of London deal

Morgan Sindall, Osborne and Speller Metcalfe among winners
1 day ago

New £3m fund to improve construction procurement

Companies invited to bid for cash grants in CITB-led efficiency drive
1 day ago

Green light for vast Nottingham Boots Island scheme

Developer Conygar plans to build a 2m sq ft mixed-use scheme
1 day ago

Goldman Sachs bankrolls Brum’s tallest resi project

Builder Sisk can now start work on 42-storey Broad Street skyscraper
1 day ago

SME contractors agree 2.75% pay deal for workers

Annual pay increase will see hourly craft rates rise to £12.79
2 days ago

Boost your online presence – join the Enquirer Directory

New site for suppliers and buyers showcases products, services and latest stories
12 months ago

Lakehouse subbie goes after Sureserve for cash

Specialist wins adjudication award after contractor goes bust
2 days ago

Firms on alert for M4 Newport £185m enabling works

Bidders day planned ahead of July invitation to tender
2 days ago

Robertson hires Laing O’Rourke infrastructure ops director

Bryan Glass will head Robertson's civil engineering business in Scotland
2 days ago

Wates starts £24m Shoreham flood defence

Enabling works to pave way for 540-home Free Wharf scheme
2 days ago

£400m Eastern Highways Framework up for renewal

Essex County Council to invite bids for third generation framework in June
2 days ago

Countryside chief operating officer exits

Rebecca Worthington steps down as Countryside reports strong first half trading
2 days ago

Willmott Dixon chalks up £20m Liverpool nursing school

Liverpool John Moores University Tithebarn building and library to be extended and refurbished
2 days ago

Boy, 12, falls from scaffold ladder on poorly guarded site

Ten metre fall inflicts life-changing injuries on boy
3 days ago

Galliford Try profit warning sparks construction arm review

Firm warns profits will be £40m below forecasts after Queensferry Crossing hit
3 days ago

Morgan Sindall boosts north west leadership team

Growth drive sees new directors appointed in Manchester and Liverpool
3 days ago

Walter Lilly wins £55m London medical HQ project

Renew Group building specialist signs preconstruction services agreement
3 days ago

Autumn start for Mount Anvil’s largest ever scheme

Green light for 800-home Royal Eden Docks scheme in East London
3 days ago

Laing O’Rourke strategy boss joins Royal BAM

Simon Finnie steered strategy at Laing O'Rourke and Kier over six years
3 days ago

New Structure Tone division lands first major deal

Detail & Build team bags fit-out for new owners of Heron House
3 days ago

New Kier chief sets out to streamline £4bn group

Andrew Davies launches strategic review to simplify business and improve cash flow
4 days ago

McAleer & Rushe closes in on £400m turnover

Hotel specialist delivers further growth and £17m pre-tax profit
4 days ago

Construction’s most considerate sites revealed

Best performing contractors confirmed: Full details
4 days ago

Infrastructure clients lead drive to eliminate site accidents

Major push to end injuries and illness caused by seven key site risks
4 days ago

Rogue roofer found guilty of fraud

Court hears "abysmal" repairs charged at £38,000 were worth just £250
1 week ago

Engie names new UK chief executive

Nicola Lovett takes helm at UK and Ireland business in May
4 days ago

Contractor services