Construction Decline


Construction growth rates for 2018 have been revised downwards

A pessimistic outlook is shared by the majority of the UK construction industry, with estimates of 0.7% growth for the year ahead in 2018. This is according to new data released by statisticians at the Construction Products Association (CPA).

This forecast takes in to account the prevailing sentiment in the market. Of specific concern is the current political uncertainty in the UK, along with a lack of clear planning for agreement and outcomes on Brexit to safeguard access to continental labour, and pricing stability of raw material costs. A decline in base line economic output and decreases in the wages have aggravated further. 

On a more positive note, when considering the rise in nationwide public housing contracts gaining approval this activity in infrastructure projects will be the primary driver of growth for 2017, contributing £7bn of works to the overall construction sector and lending towards the present outlook for the sector positing a more encouraging overall output growth rate of 1.6% for 2017, an upswing from earlier estimates of 1.3% forecast in Q1 of 2017. It is anticipated that this public sector activity will act as a driver for growth and will help to offset a deep decline in the commercial and industrial sectors. 

Forecast for growth for the construction industry in 2018 will be dependent on private housebuilding, with growth in private housing breaking ground of 3 per cent in 2017 and 2 per cent in 2018. Project growth for 2019 is estimated at 1.8%.

The Economics Director at the Construction Products Association, Noble Francis, made the following comments on the CPA industry forecasts: 

“Despite the slowdown in the general housing market, particularly in London, house builders continue to increase supply, albeit more slowly than in recent years".

“Currently, more than a third of new house building is being sustained by the government’s Help to Buy and should continue to do so over the next 18 months if the wider economy and housing market don’t slow further."

“However, if economic conditions do deteriorate further, house builders can react quite quickly if necessary."

“Increases in infrastructure investment are also expected to offset these declines and be the key driver of any construction growth going forward."

“However, concerns regarding rising costs and delays to major projects continue to dog the sector so there remains a high degree of uncertainty around infrastructure growth in the next few years."

“And this infrastructure investment will be vital for the industry as a whole."

“Without it, total construction output would fall by 1.0% in 2018.”

Source: Construction Products Association 

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