Construction output set for 18 per cent jump in three years

Dr Noble Francis
Dr Noble Francis

Construction output is forecast to increase 5.3 per cent in 2015 and 17.8 per cent by 2018 according to the latest forecasts from the Construction Products Association (CPA).

Contributing to the growth is a greater than expected boom in infrastructure activity which is now forecast to rise by 51.5 per cent over the three years to 2018 – up 9.3 per cent in 2016, 10.8 per cent in 2017 and 16 per cent in 2018.

This compares to the CPA’s autumn forecast for infrastructure growth of 8.1 per cent in 2016, 8 per cent in 2018 and 12.3 per cent in 2018.

CPA economics director Noble Francis said the more optimistic outlook for infrastructure reflected increased government commitments to road building and expectations of greater workloads in water and sewage.

The forecast infrastructure boom will make up for a greater than expected drop in private housing starts, the CPA said.

Three months ago the CPA said it expected these to grow by 5 per cent per year to 2018, but now forecasts these will grow by 5 per cent in 2016, 3 per cent in 2017 and 1 per cent in 2018, with the downward revisions attributed to uncertainty in housing policy.

Commercial retail growth has also been downgraded to 18.1 per cent for the next three years, down from 28.6 per cent three months ago, reflecting the moves by major supermarket chains to slash their capital expenditure plans.

Francis said: “Last year’s recovery in construction was driven primarily by 18.0 per cent growth in private house building.

“This year, industry growth will be more broad-based as further a further increase of 10.0 per cent in private house building is expected to be supported by 8.0 per cent growth in commercial offices and 7.9 per cent growth in new infrastructure.

“Growth rates across most of the industry are expected to slow in 2016 and 2017 because of uncertainty regarding the general election in May, which could give pause to both contract awards and industry investment.

“Whilst this is unlikely to impact construction activity this year, due to the lag between contracts and activity on the ground, it may have an adverse effect on output in both 2016 and 2017.”

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