The Summer Forecasts from the Construction Products Association (CPA) is predicting a moderate fall in construction output for the year.
Representing UK manufacturers and suppliers of construction products, along with sector trade associations, the CPA has forecast that growth in the UK as a whole will fall by 0.6% this year – signifying the first decrease in six years, following growth for five successive years.
The CPA’s Summer Forecasts also predict output in the entire construction industry will move back into growth in 2019 and 2020, when it is expected to be around 2.3% and 1.9% respectively; the CPA believes housebuilding will be the main reason for growth in the construction sector.
This is not a great surprise; the government is, through Homes England, attempting to accelerate housing construction in order to hit ambitious targets of creating 300,000 new homes each year by the mid-2020s.
In the last construction PMI survey, July’s rate of construction activity accelerated at a faster pace for more than a year, and the chief reason for that was housing, so it’s no surprise that this sector is seen as the driver of construction output.
According to the CPA’s Summer Forecasts, demand in private housing is increasing activity outside London, with its output set to rise by 5% this year and 2% next year.
Elsewhere, infrastructure will be a driver of growth with output predicted to hit a “historic high” of £23.6 billion by 2020; HS2 and Hinkley Point C will see to this.
Performance in the sector this year has been understandably affected by poor weather conditions, the collapse of Carillion earlier in the year, and the ongoing Brexit uncertainty, with recent news showing a very real possibility of no deal.
Noble Francis, Economics Director at the CPA, said fortunes have been mixed in the industry.
“Clearly the first quarter of the year was difficult for the industry due to the demise of Carillion and the bad weather.
“Things improved markedly in the second quarter due to a catch-up in work as we would have expected but, overall, it’s mixed fortunes for contractors at the moment.”