Construction growth to rebound to 2.3% next year

Aaron Morby 2 years ago
Share

UK construction output is expected to bounce back to 2.3% growth in 2019 after dipping by 0.6% this year.

The growth hiatus this year ends the five-year run enjoyed by the industry, fed mainly by private sector home building and strong commercial and industrial activity.

While forecast 2019 and 2020 growth will boost civils contractors and trade contractors working for house builders, commercial building contractors are expected to continue to feel the squeeze in both commercial and retail work opportunities.

The latest forecast from economists at the Construction Products Association, revises 2018 output down from stagnation to contraction, due mainly to bad weather and the fall-out from Carillion.

Forecasters predict growth will bounce back in 2019 and then expand by 1.9% in 2020.

Strong house building activity outside London will drive up activity in this sector by 5% in 2018 and 2% in 2019.

Infrastructure will also become a primary driver of growth for the whole industry, with output forecast to hit a historic high of £23.6bn by 2020, driven by large projects such as HS2 and Hinkley Point C.

CPA summer 2018 forecast

  • Construction output to fall by 0.6% in 2018 before growth of 2.3% in 2019 and 1.9% in 2020
  • Private housing starts to rise by 2.0% in 2018 and 2019
  • Commercial offices output to fall by 20.0% in 2018 and by 10.0% in 2019
  • Commercial retail output to fall by 10.0% in 2018 and remain flat in 2019
  • Infrastructure construction to grow by only 3.2% in 2018 and 13.0% in 2019

Without the forecast growth in infrastructure and private housing activity, total construction output would fall by 3% in 2018 and remain flat in 2019.

The demise of Carillion resulted in a poor performance for the industry at the start of the year, which combined with the bad weather, lost UK construction £1bn of work.

It is estimated 60% of this work may be recovered, but Carillion’s collapse will cause further delays at two major hospitals as work on the £335m Royal Liverpool University and Birmingham’s £350m Midland Metropolitan hospitals is on hold until at least 2019.

Brexit uncertainty continues to drive the sharpest decline for construction in the commercial sector, particularly felt in the offices sub-sector which is expected to fall 20% in 2018 and a further 10% in 2019.

Meanwhile, the shift to online shopping is causing woes for the high street, with new retail construction expected to fall by 10% this year.

Noble Francis, Economics Director at the Construction Products Association said: “Overall, it’s mixed fortunes for contractors at the moment.

“On the positive side, house builders are keen on accelerating building rates outside of London and that is expected to be enough to offset sharp falls in house building in the capital.

“Firms working on major infrastructure projects also have a lot of work in the pipeline. Infrastructure output is forecast to rise by 3% in 2018 and 13% in 2019.

“This growth is highly dependent on large projects such as HS2 and Hinkley Point C. As ever, there remain concerns about government’s ability to deliver infrastructure projects without the cost overruns and delays that we have seen on Crossrail and HS2 recently.

“On the negative side, the elephant in the room is clearly Brexit uncertainty, which has had a big effect on international investment, especially where it is high up-front investment for a long-term rate of return, which is now highly uncertain.

“It badly affects demand in sectors such as prime residential in London, commercial offices towers and industrial factories, which is dependent on manufacturing.”

Latest news

Wates resumes full pay for all staff not on furlough

Chief praises staff for great professionalism in the most challenging of condition
1 day ago

Canary Wharf Contractors could cut 100 jobs

Another round of redundancies as projects come to an end with no replacements in pipeline
1 day ago

Tower crane lifts end long climb to work for operators

Laing O'Rourke trials mast climbing lifts for tower crane operators at London site
1 day ago

Government agrees £30m bailout for rebar giant

Emergency loan to Celsa secures rebar supplies to construction
1 day ago

Plans go in for 2,200-home Oxfordshire garden village

Sustainable scheme will also include new schools and manufacturing space
2 days ago

Winvic raids Graham Construction for civils boss

Rob Cook joins as civils and infrastructure director at Winvic
2 days ago

HS2 rebids £300m overhead power system

Bidding starts for first overhead lines powering trains to operate at 360km/h
2 days ago

Work with the Enquirer to help your post Covid recovery

Promote your business now to grab a bigger market share as construction bounces back
2 weeks ago

Sisk seals £150m Santander campus in Milton Keynes

Biggest building contract signed off during restricted covid working
2 days ago

Keep the industry updated by joining the Enquirer Directory

Membership lets construction know you are open for business now or in the future
2 years ago

Builder wanted for £35m Forth Bridge tourist attraction

Contract to build bridge walkways and viewing platforms to be awarded before the end of 2020
2 days ago

JCB powers up first hydrogen fuelled digger

JCB in race to lead the world on hydrogen-powered plant
3 days ago

Construction site death rates on the rise

Latest HSE figures show 40 construction fatalities last year
3 days ago

Construction firms urged to claim millions in tax rebates

Research and development tax credits available - find out if you can claim
2 days ago

Plans in for £150m South Kensington Tube station scheme

Native Land and TfL advance scheme to revamp west London Underground station site
2 days ago

Hotel plan for Lincoln department store aproved

Town centre House of Fraser will be demolished for a 150-room hotel
1 day ago

Site canteens to re-open under latest guidelines

Latest Site Operating Procedures guidance allows limited 1m-plus distancing with risk reduction measures
3 days ago

Kier eyes rights issue as debt rises to £440m

Debt rises again as Kier feels impact of Covid-19
3 days ago

Willmott Dixon unveils plan for 5% staff cut

Private builder seeks voluntary redundancies as revenue set to drop 20%
3 days ago

HS2 contest for £500m tunnel and lineside M&E works

Major contract for phase one and 2a will be let as a target cost contract
4 days ago

Boris clears planning red tape on change of use to housing

Town centre buildings to be converted without planning to save the high street
4 days ago

Morgan Sindall to start £65m Salford Uni project

Work to start within weeks on Science, Engineering and Environmental Building
3 days ago

Cundall latest consultant to cut jobs

Redundancy consultation starts with 6% of staff at risk
3 days ago

Eight major contractors rally to tackle climate change

BAM, CWC, Morgan Sindall, Multiplex, SRM, Skanska and Willmott Dixon declare net zero carbon pledge
4 days ago

Road worker hit by flying metal from HGV

Construction materials most frequently dropped on motorways
4 days ago

Redrow to scale back London construction work

Focus shifts to regions as buyers want more space after pandemic
4 days ago

Scottish contractor Robertson plans redundancies

Annual pay increases deferred for a year as job cuts loom
4 days ago

Modular specialist ilke Homes to cut staff numbers

Business was handed a £30m loan by Homes England last November
5 days ago

Boris ‘new deal’ injects £5bn to speed-up infrastructure

Prime Minister promises to build, build, build with national renewal plan
4 days ago

Start date for £19m Nottinghamshire blue light HQ

Henry Brothers to start work next month after signing a deal yesterday
4 days ago

Contractor services