Construction output declines for third year in a row

Published:  12 August, 2010

UK: Total construction output in the UK in 2010 is forecast to be £89 900m at constant 2005 prices, according to a report from market analysts, Leading Edge.

This figure is 2.1% down (£2000m) on 2009 figures, making it be the third year in a row which has seen a fall in overall construction output.

The estimated 2010 construction output is at a level not seen since 2001-02, while forecast output for 2014 at £92 700m is still over 11.6% lower than the 2007 peak of £104 900m (at constant 2005 prices).

When looking at output levels by sector, public spend is expected to hold up for 2010 and then see a large drop from 2011 onwards.

First-half output figures for public spend are up by over 35% on last year. The drop in private commercial output is not forecast to be as large as was originally feared while there is expected to be a big fall in repair and maintenance in the non-housing sector.

Total construction output for 2011 is forecast to be fairly flat with a small reduction of 0.2% on the 2010 figure at constant prices. Leading Edge said it expected to see falls in output in all the public sectors, including both newbuild and RMI, as the new Government's cuts really start to bite.

However, the market analysts said it expected all the private sectors to see output growth during 2011, which will offset the falls in the public sector

Mel Budd, managing director at Leading Edge, commented: "With the market sectors moving at different speeds, contractors and building materials manufacturers are going to have to target the right sectors to maximise any growth opportunities.

"Overall, we forecast that 2010 and early 2011 will be the low point for the construction sector as a whole with limited growth expected to return to total output in 2012."

Leading Edge's construction forecast is a six-monthly report that has been published for the last 21 years. Subscribers range from large multi-national companies such as Balfour Beatty, Skanska, Saint-Gobain, KPMG and Knauf to smaller, regional players.

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