Housing and infrastructure to drive construction recovery

A forecast from the UK’s Construction Products Association (CPA) has pointed to recovery in the construction industry starting in 2014 and continuing through 2015 and beyond.

The latest figures predicted construction output growth of 2.2% in 2014 and 4.5% in 2015.

The association, which represents the UK’s manufacturers and suppliers of construction products, components and fittings, forecast that recovery will be led primarily by private housing in the short-term, with infrastructure expected to further boost activity in the medium-term.

Noble Francis, CPA economics director, said, “The industry has suffered greatly over the past five years and earlier this year saw its lowest levels since 2001. Even with growth in the second half of this year, output is set to fall 1.5% for 2013.

"However, our forecast is for construction to recover from 2014. Growth over the next 12 to 18 months is predominantly due to a surge in housing sector activity, which is benefitting from the Help to Buy scheme.

“Help to Buy has clearly stimulated demand and led to increasing supply from housebuilders. We forecast housing starts will rise 39% by 2015.”

CPA said private housing starts were forecast to rise 15% in 2013 with average growth of 9% per year from 2014.

CPA said it saw mid-term growth being led by infrastructure activity, particularly from rail construction such as Crossrail, and energy-related work including nuclear, offshore wind, and small renewables schemes.

Rail infrastructure in the UK is forecast to rise 41% by 2016 while energy infrastructure is set to rise 89% by 2017. Factories construction is set to grow 42% by 2017 driven by manufacturing and export growth.

However, not all sectors of the industry are set to grow. CPA forecast that public sector construction would fall 5.2% in 2013 after an 11.4% fall last year.

Regional disparities also remain evident with London and the South East showing the strongest levels of activity, while elsewhere, contractors are experiencing poor workloads.