Construction Recovery Stalled Until 2013

The recovery in construction output experienced by the industry during much of 2010 will stall in 2011 according to the latest forecasts from the Construction Products Association (CPA).

Industry output is expected to decline by 2% in 2011 compared with 2010, with a further fall anticipated in 2012. Further growth in output is not now expected until 2013.

Commenting on the latest forecasts, Michael Ankers, Chief Executive of the CPA said: "The government has rightly focussed on the private sector playing a leading role in driving the UK’s economic recovery. Unfortunately, we do not expect the increase in private sector investment in construction over the next two years to compensate for the sharp falls in public sector investment. Although private sector construction is forecast to grow by 5% during the next two years, construction work from the public sector is expected to fall by 17%.

"By 2013, however, we expect to see strong growth in the commercial sector, combined with increasing construction activity related to housing, rail schemes and the development of energy infrastructure, leading to a recovery in construction output at the end of our forecast period.

"The government has acknowledged the importance of the construction industry to the economy, accounting as it does for 8% of GDP and employing 2.5 million people, by highlighting it as one of the six sectors for initial government action in its Growth Review published at the end of November. The increase in construction output in 2010 has been an important component of the growth in GDP over the last two quarters. Unfortunately, these latest forecasts show that construction is unlikely to provide the same impetus over the next two years and this will almost certainly slow down the rate of growth in the wider economy."

(CD)