2nd September 2015

What's on the Forecast for the Construction Industry?

The CPA have released new figures that predict that construction output will continue to increase, with a growth of 21.7% expected by 2019

Construction Industry Forecast: Is Output Set To Grow? 

Following years of uncertainty, the construction industry is showing encouraging signs of growth. In their recent survey, the Construction Products Association (CPA) explained that companies across the whole construction supply chain have been reporting rises in output, including building contractors, specialist contractors, civil engineers and product manufacturers. The construction industry has so far experienced nine consecutive quarters of growth, which looks set to continue according to the latest survey by the CPA. 

The Forecast

The CPA have forecast construction output to increase 21.7% by 2019. Noble Francis, Economics Director at the CPA, commented on the latest forecast stating, “Prospects for the construction industry are very bright. Construction output is forecast to increase 4.9% in 2015 – almost double the rate of growth for the UK economy as a whole – and 21.7% overall by 2019. This growth will mainly be driven by an increase in work across the private housing and infrastructure sectors.”

This latest forecast has decreased slightly from the one they released four months ago, which suggested that construction output would grow by 5.5% in 2015. However, its forecast for 2016 has increased from 4.0% to 4.2%. Here is where we can expect to see growth:

  • Commercial office construction will increase by 10% this year, followed by 7% in 2016.
  • Industrial construction output will rise by 9.1% in 2015 and 6.7% in 2016.
  • Private house-building will rise by 9.0% in 2015 and 5.5% in 2016. This will be supported by a strong property market, rising real wages, increased mortgage availability and government policies such as Help to Buy.  
  • Infrastructure output will grow by 72.4% up to 2019.
  • Growth in the industry will increase by 10.3% this year, 10.8% in 2016 and 10.4% in 2017.

Construction Forecase: Is this sustainable?

The construction industry may boast nine months of consecutive growth, however as Richard Beresford, Chief Executive of the National Federation of Builders, explained on, “Despite nine consecutive quarters of reported growth, and healthy order books, future growth is far from assured. The severity of the skills shortage is such that the industry will see unsustainable rising labour costs or an increasing inability to deliver work. Industry’s efforts to address skills shortages cannot take effect soon enough.”

Nobel Francis agrees, stating, “Our forecast growth of 21.7% by 2019 for construction has raised a key risk regarding the lack of skilled labour. Employment in the UK construction industry is now 390,000 lower than at its 2008 peak.” In order for the CPAs forecasts to become reality and for the industry to continue to grow, the skills shortage must be addressed. This includes revolutionising the construction industry to appeal to generation Y.

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