Member Article

Construction output to fall by 3% in 2012

Construction output is set to fall by almost 3% in 2012 according to new figures published by the Construction Products Association.

Capital budget cuts previously announced in the CSR have impacted upon industry activity in both the short and medium term, with output expected to remain flat in 2013 before private sector work strengthens and drives a return to growth in 2014.

The construction industry accounts for nearly 9% of the UK’s gross domestic product, and the latest figures indicate that it could be a major constraint on economic growth over the year ahead.

Commenting on the forecasts, Michael Ankers chief executive of the Construction Products Association said: “It seems inevitable that construction output fell in the first three months of this year and this will have had a significant impact on the rate of GDP growth at this time.

“With new orders for construction falling significantly at the end of last year, 2012 is going to be a difficult year for the construction industry with output forecast to fall by almost 3%.”

Public sector spending cuts are now beginning to take effect, and with the exception of the private housing market, which is forecast to grow by 5% this year and 11% in 2013, the private sector is unlikely to witness much further growth.

Despite this, total housing starts in 2012 were less than half needed to meet the number of households created.

Mr Ankers continued: “ What is particularly disappointing is the weakness of the private commercial market where output is expected to decline both this year and in 2013.

“Office development is slowing down and private finance for social infrastructure is unlikely to make a rapid comeback.

“One bright spot in the forecasts is investment in infrastructure, particularly rail and energy where growth is expected to increase in each year from now until 2016.”

Rail construction is set to rise by 56% in the next four years, while energy construction will triple by 2016.

This was posted in Bdaily's Members' News section by Ruth Mitchell .