Surging growth running at nearly twice present annual inflation will be driven by an increase in private housing and strong annual 10% rises in infrastructure output.
According to the latest forecasts from the Construction Products Association, the only cloud on the horizon is a sharp fall in public housing investment and the major challenge of investing in extra skills.
Strong steady growth
- Construction output anticipated to rise 4.9% in 2015, 4.2% in 2016 and 3.5% in 2017
- Infrastructure output is forecast to rise 10.3% in 2015, 10.8% in 2016 and 10.4% in 2017
- Private house building set to rise 9% in 2015, 5.5% in 2016 and 3.5% in 2017
- Public house building expected to fall 10% in 2015, 5% in 2016 and remain flat in 2017
Noble Francis, Economics Director, said: “Prospects for the construction industry are very bright.
“Infrastructure is forecast to be one of the key drivers of construction growth over the next five years.
“The government has a National Infrastructure Plan in place with a pipeline of projects across the UK worth £411bn.
“As a consequence, we forecast that infrastructure output will experience double-digit growth each year to the end of our forecast horizon in 2019.”
The forecast has factored in a delay until 2018 for the main works on the nuclear power station Hinkley Point C. Due to concerns regarding planning and financing, main works on HS2 are not anticipated to start before 2020.
Francis warned that skill shortages were now being seen as a significant risk to the booming growth forecast.
“Our forecast growth of 21.7% by 2019 for construction has raised a key risk regarding the lack of skilled labour.
“Employment in the UK construction industry is now 390,000 lower than at its 2008 peak. So far, the lack of skilled labour has primarily affected the house building sector.
“As the wider industry activity picks up, however, this issue is likely to spread across the industry.”
Francis added: “In the short-term, it is already putting upward pressure on costs. In the medium-term, the forecast growth will not be possible without significant investment in skills.”