CPA Report Indicates Growth in Construction
Another industry report, this one by The Construction Products Association, forecasting growth in the construction industry. The report has an optimistic view and states that the three areas of private house building, infrastructure work, and commercial activity will contribute towards the growth in the sector within the next four years.
Construction output is expected to rise by 3.4% in 2014 and an increase of 5.2% within 2015. This growth is projected to continue in to 2017. As with any prediction, in an unpredictable economy, there is always the potential for uncertainty, where sustaining long-term growth and sustainability will become difficult after a number of years – in this case, post 2015.
This uncertainty is further validated by the output turnaround in the last year. “The construction of industry is in a very different place to just one year earlier, when output fell to a level 15.4% below its per-recession peak. Since 2013 Q1, activity has picked up considerably” said Dr Noble Francis, Economics Director of the Association.
The growth in Q1, 2013 was due to:
- Rapid expansion in house building
- The recent growth in new infrastructure
- Recovery in London commercial activity that supplemented for the rise in private housing
This one is the star growth performer with rapid expansion and growth, driven by the wider economic recovery and the somewhat criticised ‘Help To Buy’ scheme that kept some the critics quiet in recent times about their predictions on rising house prices that would cripple the market. In fact, the results have been quite the opposite. Housing figures were estimated to be 24% in 2013, and forecasted to be 16% in 2015 and 10% in 2015 – slowing down even further after 2016.
Growth in Q2 in 2013 was a driven mainly by the infrastructure sector, and it is forecasted to increase by 39.7% in 2017.The recovery from the roads sub-sector and rail is believed to be growth contributors.
The energy sector also creeps up to being a main contributor for infrastructure growth in the medium term from 2015. An estimation made mainly based on Hinkley Point C. the nuclear reactors work. Again, long-term growth in the sector could be questionable due to project delays.
The largest construction sector which is the private commercial segment fell by 33.1% between 2008 and 2012. Major office projects in London have assisted in the recovery process and is now expected to grow by 2.7% this year. A rise in demand for prime office and retail spaces outside of London and the South East, and general economic recovery after 2015, is expected to boost this sector.
The Black Sheep
It’s not surprising that the public sector gets the black sheep mark from Dr Francis, who stated that the largest constraint to the industry’s recovery is the public sector. Public non-housing output fell by 27.2%, and the sector is not anticipated to recover until 2015 and until capital investments grow.
Statistics and information extracted from : The Construction Products Association press release on Monday 13 January 2014