Big projects to drive 4% annual construction growth

Aaron Morby 1 year ago
Share

Economists have ticked down construction growth forecasts for this year from 3.8% to 3.6% because of slower growth in the UK economy.

Theme graph up growth construction
After a slight slowdown in growth rates this year, the industry can look forward to three years of steady 4% growth in construction output

But major projects like HS2, the London super sewer and Hinkley Point are expected drive the industry along after that at a booming 4% average annual growth level in the medium term.

Forecasters at the Construction Products Association have dismissed fears of gathering global headwinds with an upbeat and steady growth forecast through to 2019.

Construction Products Association Winter forecast

2016-2019: 4% average annual growth

Screen Shot 2016-02-07 at 15.21.10

  • Construction output is forecast to rise 3.6% in 2016 and 4.1% in 2017
  • Infrastructure work is forecast to rise 56.9% by 2019
  • Industrial activity expected to surge 21.3% by 2019
  • Offices construction to increase 7.0% in 2016 and 2017
  • Private housing starts to rise 5% in both 2016 and 2017

Professor Noble Francis, economics director, said:  “The key fundamentals for the sector are generally positive and construction growth is set to be more balanced. 

“Private housing work, especially in London and the South East, provided the majority of growth between 2012 and 2015.  During this forecast period, however, all three of the largest construction sectors – private housing, commercial and infrastructure – are expected to drive industry activity.

“The infrastructure sector is set to stand out, rising 56.9% by 2019 owing to substantial activity in the rail, energy, roads, water and sewerage sub-sectors. 

The giant HS2 project, which was excluded from previous forecasts due to uncertainty regarding its cost, planning and timing, is now being included. 

“The energy sub-sector will be boosted by work on Hinkley Point C where main works are anticipated from 2018, though further delays cannot be ruled out,” he said.  

“Roads construction is also likely to increase throughout the forecast period, by 37.2%, but this is substantially less than was initially expected as Highways England struggles to enact its project pipeline to time and budget.”

Francis said that the commercial sector was forecast to improve 3.7% on average per year through to 2019. 

This would be driven by a flurry of new offices construction in London, Birmingham and Manchester delivering, 7% growth this year and next. Retail construction, on the other hand, was expected to remain flat this year with a modest 2% in 2017.

Private housing starts were also forecast to rise 5% in both 2016 and 2017, buoyed by a high latent demand for home ownership, while  public housing starts fall 5% in 2016.

Francis warned: “There are significant risks to this forecast. “The chief concern remains weakness in China and the effect it can have on other countries.  Second is the EU Referendum, likely due this year.  While we make no assumption about the result, we note the uncertainty around the issue is already affecting investment decisions. 

“Third and perhaps of most importance for the industry is the urgent challenge around skills shortages.  The availability and cost of skilled labour has clearly impacted the house building sector; the recovery in other sectors is already showing a similar vulnerability.”

Latest news

Alandale Rail bosses jailed for Thameslink corruption

Four men jailed and Alandale Rail fined £25,000 over fraud and bribes at Farringdon station project
14 hours ago

Demolition firms lead way with virtual smart cards

Skills cards can now be stored on smartphones
6 hours ago

Legal row hits stalled £200m Liverpool Chinatown

Council and developer in war of words over flagship scheme
15 hours ago

Skanska confirms £142m Tin Pan Alley contract

Skanska signs off contract for London Giles Circus mixed-use development
15 hours ago

Deal to start £65m Sussex shopping centre

Pre-sale and lease deals trigger Burgess Hill town centre revamp
14 hours ago

Jacobs in merger talks with CH2M

Merger would create global engineering giant to rival AECOM
15 hours ago

Race on for £240m Leicester construction framework

Four-year framework to deliver schools and city centre redevelopment plan
16 hours ago

Final week to vote for best companies in construction

Laing O'Rourke and Cemex are latest sponsors to support the Enquirer awards
15 hours ago

Plans in for £400m Kent housing scheme

Medway's 1,400-home Rochester Riverside plan submitted
3 days ago

Hotel contract row forces Primus into CVA

Contractor set up by former Multiplex boss Martin Tidd faces cash flow crisis
4 days ago

Manchester’s tallest building set for green light

Allied London's most ambitious scheme so far set for approval
4 days ago

Morgan Sindall hunts top talent at virtual jobs fair

Construction & Infrastructure division takes careers event online to boost diversity
4 days ago

Landmark VAT ruling on student rooms projects

Tax tribunal overturns HMRC’s VAT policy on student accommodation
4 days ago

Grenfell cladding fire test verdict due next week

Government slashes estimate of residential blocks at risk from 600 to 208
4 days ago

£100m East Riding prison gets green light

Category C jail to be built next to HMP Full Sutton, near York
4 days ago

GSK scraps £350m Cumbria pharma plan

Pharma giant will invest extra £140m existing facility expansion
4 days ago

Specialists land first trade packages at huge Berkeley site

Main construction starts on 88-acre Southall Waterside site
4 days ago

Electrification plans scrapped on three major rail routes

Contracts worth millions axed as Government switches focus to new train technology
4 days ago

Project delays dent Clugston results

Contractor confident about future prospects following a "challenging" year
4 days ago

UK drags Skanska Europe into £40m loss

Skanska chief aims to cut operational costs and tighten risk management
5 days ago

McLaren set to bag £45m Lakeside extension

Contractor beats off McAlpine, ISG and Sisk to take Essex retail deal
5 days ago

Demand grows for immediate revamp of building regs

Local council chief attacks BRE, contractors and manufacturers for not sharing previous fire test results
5 days ago

Canary Wharf Contractors pays £11,000 tax on £70m profit

Company offsets £13.9m Corporation Tax bill against losses at other group divisions
5 days ago

Mount Anvil plans 1,000 flats in London Royal Docks

Deal with London ExCel centre paves way to build block of apartments
5 days ago

Consultant RLB stages mass raid on Mace managers

Five senior figures jump ship to join rival
5 days ago

Ministers reject client levy option in Farmer Review

Government backs most calls for reform but stops short of 0.5% charge on clients
5 days ago

Construction and fit out boost profits at Morgan Sindall

Contractor bucks recent sector trend by telling City to expect higher than predicted profits
6 days ago

Lendlease ordered to pay £14.8m for city tower falling glass

Cladding contractor to pick up bill after 15-foot glass pane fell from 17th floor
6 days ago

Civil engineers act to avert Grenfell-style disasters

ICE launches review of lessons from tower tragedy to avoid infrastructure failures
6 days ago

Man killed in derelict church collapse

Tragedy at Cardiff site where old church was being demolished
6 days ago

Contractor services