A raft of surveys suggests that construction could be turning a corner with workloads and tender prices set to rise from 2014 onwards. The positive news comes as the latest ONS figures showed construction workload still falling.
However, the Office for National Statistics’ GDP Preliminary Estimate for Q1, 2013 was less positive reading. Although it showed the UK has narrowly avoided a triple-dip recession, with the economy growing 0.3% in the first quarter of the year, construction was the worst-performing sector, declining by 2.5% in the last quarter – 5.9% on the Q1 2012.
The latest forecast from the Construction Products Association acknowledges output will continue to fall by 2.1% in 2013, but predicts total construction output will grow 1.9% to £97bn in 2014, thanks largely to investment in private housing, infrastructure and factories, followed by a 3.8% rise in 2015 and a 4.7% rise in 2016. It also says:
- Private sector construction output is forecast to rise 2.6% in 2014 to around £69bn, then 4.4% in 2015 and 5.6% in 2016.
- Public sector construction output is likely to increase 0.3% in 2014 to £29bn, then 2.3% in 2015 and 2.5% in 2016.
- Private housing starts are set to reach 102,012 in 2013, up 8% on 2012, boosted by previously announced government policies such as FirstBuy and the Funding for Lending Scheme. These should rise 10% to 112,213 in 2014, then 12% to 125,678 in 2015 on the back of measures announced in the March Budget to provide financial backing to potential house purchasers.
The latest RICS construction market survey reports increases in workload already coming through, and more construction professionals saw workloads rise last quarter than at any time since the end of 2007. The RICS said a main driver was the boost in private housing construction.
Meanwhile, Gardiner & Theobald’s Tender Price Indicator found that tender prices saw a slight 0.5% increase on average during the second quarter of 2013, compared to the same time last year.
London, the south-east and the South West are expected to continue to lead a modest recovery into next year with each experiencing a 2% increase in tender prices in Q2 2014 compared to Q2 2013.
Responding to the latest ONS figures, Judy Lowe, deputy chairman of CITB, said: “The news that Britain has narrowly avoided a triple dip recession is scant comfort to the construction industry, which is in a glacial depression. With our Construction Skills Network data showing 60,000 jobs were lost in 2012 and a 8% drop in output, it is essential that this key driver of economic growth gets the immediate boost it needs to kick-start activity.”
Graham Robinson, global consultant at Pinsent Masons, commented: “The construction sector is one of the largest employers in the country so even a marginal dip in construction has a knock-on effect on the jobs markets.
“On the other hand, new private house building is now in recovery, stimulated by the government’s Funding for Lending and the new Help to Buy initiative. However, the construction sector is not expected to recover until the later part of 2013.
“Funding still remains a problem. There are deeper funding issues across other sectors, particularly publicly funded construction sectors such as new roads building and maintenance. The route to short-term boost to the construction sector could be through maintenance of existing infrastructure such as housing and roads.”
