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Construction output to fall 5 per cent in 2012

Construction output could tumble by more than 5 per cent during 2012, according to the latest forecasts from the Construction Products Association

The forecast growth for this year has been downgraded, with output expected to fall by 5.2 per cent in 2012, lower than the 3.6 per cent drop that the CPA forecast in its autumn report, reported sister title Construction News.

But output is estimated to have grown by 1.8 per cent in 2011, up from the 1.1 per cent contraction in the previous forecasts.

The industry is expected to remain flat in 2013, growing by a modest 0.4 per cent, with recovery not expected until 2014, by which time output will be 12 per cent lower than its 2007 peak.

The largest falls are in the public sector, with total public non-housing construction in 2012 set to fall by 24 per cent and 13 per cent next year. Education is forecast to fall by 30 per cent this year.

The strong private sector recovery that has been hoped for is still not forthcoming, according to the forecasts. Retail is continuing to grow, though the output value will still be below the peak of 2007, but offices will see a 2 per cent fall in 2012, while health is expected to fall by 15 per cent.

Infrastructure output is set to grow by 20 per cent by 2015, with an upgraded forecast growth for this year of 1.6 per cent. Energy construction is set for a threefold increase over the next three years.

CPA chief executive Michael Ankers said: ‘For the construction industry to return to growth there needs to be a strong private sector recovery, but this is just not happening.

‘Continuing uncertainty about the future of the euro zone and a lack of consumer confidence in the UK are holding back important investment decisions. As a result the largest area of construction activity - private commercial work- is forecast to fall by a further 5 per cent in 2012 and remain at that level in 2013.

The forecasts show that private housing is expected to recover, growing by 2 per cent in 2012 and 6 per cent in 2013. But public housing is forecast to see a 20 per cent contraction this year, with continued falls up until 2015.

Ankers added: ‘Although new housing starts in the private sector are set to continue their slow recovery, in the short term these are more than offset by the sharp fall in public sector housing.

‘As a result the number of new homes started in 2012 is forecast to be 5000 fewer than this year, and at just 113,000 this is less than half the number of homes needed to accommodate the additional number of households expected to be created over the next 12 months.’

 

Other findings in the Forecasts include:

  • Public Sector construction to fall 18 per cent between 2011 and 2014
  • Education construction to fall by one quarter in 2012
  • Health construction to decrease15 per cent in 2012
  • Infrastructure construction to rise 20 per cent by 2015
  • Energy construction to increase threefold by 2015

 

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