Construction forecasts for the next few years

Recently the Construction Products Association (CPA) unveiled their construction industry forecasts for 2016 – 2019. The CPA acts as a single voice to promote and campaign for the construction product manufacturers and suppliers in support of this major UK industry.  

Construction forecasts have been revised down from 3.8% to 3.6% due to the fact that the economic growth is expected to be slower this year. Output growth, however, is forecast at 4.1% in 2017, which is an increase from the 3.7% of this autumn’s forecast.

Mainly, this is because of the works on HS2 which haven’t been used in prior forecasts, with project delays and budgets factoring in.

The uncertain nature of economic growth has always been a risk to forecasts over the past year. The biggest concern, with regards to this, is China or any corruption that comes to a slowing of growth in other countries. This is a concern because if China’s (or other emerging markets) economic environment is on the decline then this could have an unpleasant affect on the UK’s economic and construction growth.

Uncertainty in the build up to the results may have negative impacts on consumer and business investment too, as it affects both homeowner and business confidence.

However, even though growth in house building is expected to soon be on a gradual decrease, there is expected to be a rise in recovery in other sectors such as commercial and infrastructure. Construction output, as previously mentioned, is expected to rise 3.6% in 2016 and 4.1% in 2017 and infrastructure work is thought to rise 56.9% by 2019. Consequently significant concerns, regarding the available skills and materials throughout the industry, have arisen.

In order to make sure that the forecast increase is achieved, issues with the availability and cost of the skills and materials have been underlined in private housing as this is in which the post-recession recovery has been the most rapid. Despite this, private housing should start to rise 5.0% in both 2016 and 2017. 

Activity in industrial production is 9.2% below the pre-recession peak and development is 6.3% below the peak of the pre-recession. It is predicted that industrial activity will increase 21.3% by 2019.

Additionally, office construction is likely to increase 7.0% in 2016 and 2017. This sector will benefit from the strength of business investment and large projects, even (if not especially) outside of London! The output in retail is likely to remain flat in 2016, however.