The Construction Products Association’s latest Forecast anticipates that growth in private house building, infrastructure work and commercial activity are set to drive recovery in the industry over the next four years.
Key highlights include:
· Construction output is expected to rise by 3.4 per cent in 2014 and by a further 5.2 per cent in 2015;
· Growth is projected to continue throughout the forecast period, to 2017; however,
· Considerable uncertainties remain regarding the long-term sustainability of the recovery in the industry and wider economy in the latter years of this forecast, post-2015.
Dr Noble Francis, Economics Director of the Association, commented: “The construction industry is in a very different place to just one year earlier, when output fell to a level 15.4 per cent below its pre-recession peak. Since 2013 Q1, activity has picked up considerably. Initially this was due to a rapid expansion in house building but more recently growth in new infrastructure and a recovery in London commercial activity have supplemented further rises in private housing.
“Private housing has seen a rapid recovery, albeit from levels of house building that are half the number needed to meet the number of households created. This private housing growth has been driven by wider economic recovery and government’s Help to Buy policy. Housing starts in Great Britain during 2013 are estimated to have increased 24.0 per cent and further growth rates of 16.0 per cent in 2014 and 10.0 per cent in 2015 are forecast.
“After 2015, without Help to Buy to support housing market demand, there are strong concerns about whether house building will continue to improve despite the clear need for new housing. As a consequence, the Association’s forecasts anticipate the growth in private housing starts slowing in 2016.
“In the second half of 2013,” Dr Francis continued, “the infrastructure sector was a key driver of construction growth, with output in the sector forecast to increase 39.7% by 2017. This growth is primarily expected from a recovery in the roads sub-sector, where output fell by over 50.0% in the space of two years, combined with further growth in rail construction.
Turner & Townsend managing director Steve McGuckin commented: “”Headhunters tell me they’re busy again as the industry’s big players seek to hire the best talent. And where senior level recruitment leads, more junior jobs will follow.
“The industry has long experience of riding out the peaks and troughs of the economic cycle. Its best players are steadily rolling out their latent capacity to meet growing demand.
“Rapid expansion after such a long lean period means some growing pains are inevitable, but with careful cost planning, the business risk associated with growth can be mitigated.
“November’s surprise dip is a minor distraction for a newly confident industry - for most of us, it remains a case of ‘don’t panic and keep digging’.”