Construction forecasters have reduced their growth predictions for the year as concerns mount about the industry’s economic health.
The Construction Products Association’s (CPA) spring forecast is predicting 3% growth in industry output during 2016, a downward revision from the 3.6% growth forecast three months ago. It is forecasting a 3.6% increase in output in 2017.
The organisation blamed concerns regarding the “slowdown in global economic growth prospects” and “the potential for growth in the industry given key issues around skills shortages”.
This follows gloomy news on industry output from official government figures, which fell by 0.3% in February compared with the previous month. All new work and repair and maintenance reported decreases, falling by 0.2% and 0.5% respectively. Compared with February 2015, output in the construction industry increased by 0.3%.
CPA spring forecast highlights:
- Construction output is forecast to rise 3.0% in 2016 and 3.6% in 2017
- Private housing starts expected to rise 5.0% in both 2016 and 2017
- New offices activity anticipated to increase 7.0% in 2016 and 6.0% in 2017
- Retail construction expected to fall 1.0% in 2016 and only rise 2.0% in 2017
- Warehouses activity forecast to increase 23.7% by 2019
- Infrastructure work is anticipated to rise 56.3% by 2019
It is the third time in six months that industry growth forecasts for 2016 have been cut by the CPA, which predicted growth of 4.2% only last August.
However, for some sectors, the association’s long-term prognosis is healthy, with infrastructure anticipated to rise 56.3% by 2019 (see box).
Professor Noble Francis, CPA economics director, said: “The latest forecasts for construction are still positive. With growth of 3.0% in 2016 and 3.6% in 2017, activity in the construction industry is expected to outpace growth in the wider UK economy.
“The risks to this growth, however, continue to rise. UK economic growth forecasts continue to be downgraded in light of poorer global economic growth prospects.
“The most pressing issue is whether the wider construction industry actually has the skills available to deal with double-digit growth in the infrastructure, commercial and private sectors at the same time. By 2019, total construction output is expected to be £20bnn higher than in 2015, yet employment in the industry remains 324,000 lower than it was over seven years ago. If the growth we have forecast is to be achieved then the serious issue of skills shortages needs to be addressed.”
