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Thu June 24 2021

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Path to slow recovery starts next year

22 Apr 13 The construction industry is on course to return to growth mode next year but it will be 2017 before output returns to 2011 levels, which was hardly a banner year.

The spring 2013 industry forecasts published by the Construction Products Association (CPA) figure on a 2.1% fall in output this year. After the 8.1% fall of 2012, it will take several years of growth for the industry to recover and return to levels of activity not seen since before the crash.

The CPA is forecasting construction output to grow 1.9% next year, followed by growth of 4.7% in 2016 and 4.5% in 2017.

Growth is expected to be driven by the private housing and infrastructure sectors.

CPA economics director Noble Francis said: “The industry lost £9bn of activity last year and these latest forecasts anticipate a further £2bn loss in 2013. This fall is primarily due to the lack of private sector investment and the continuing bite of public sector spending cuts. Conditions were exacerbated by poor weather during the first quarter.

“Of most concern is the fall in output in private commercial, the largest construction sector, which fell 10% last year and is estimated to fall a further 7% in 2013.

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“Despite this, we are already encouraged by signs of improved market activity, primarily driven by private housing and infrastructure. We anticipate that government policies such as Help to Buy will boost private housing, which is expected to rise 19% in just two years. Infrastructure activity is set for 7% growth in 2013, boosted primarily by rail construction such as Crossrail, Europe’s largest project, and station refurbishments around the country.

“Overall, 2013 is anticipated to be extremely challenging. From 2014 prospects are brighter for the industry, but the key risk is the extent to which government announcements feed through to activity on the ground.”

Key points in the forecasts include:

  • Construction output to fall 2.1% in 2013
  • Private house starts to rise 19% in two years
  • Public education and health construction both set to fall 15% this year
  • Private commercial, the largest sector, to fall 7% this year
  • Rail infrastructure to grow 14% in 2013
  • Energy infrastructure to grow 15% per year from 2015.

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