Construction industry is set for 12% fall in output
Published: 20 April, 2009
LONDON: The latest industry forecasts from the Construction Products Association report that the sector entered 2009 with its sharpest falls in output since 1980 and lowest new orders since 1983.
Coupled to this, the forecasts for 2010 indicate that the industry will suffer a 12% fall in construction output - the worst on record, followed by a further fall of 3.4% in 2010. Significant positive growth is only expected in 2012 and by the end of the forecast period, in 2013, construction output is still expected to be below levels experienced in 2002.
Noble Francis, economics director at the CPA, said: "The current economic recession is having a major impact on our industry and this is the most serious downturn most of us have ever experienced. We have already lost 60 000 jobs, with more expected to follow and an estimated 12 000 construction workers are on short-time working.
"The crisis in financial markets last autumn led to a collapse in credit that is vital to private sector construction. The Government's attempt to revive the financial sector, combined with various fiscal stimuli, has left public borrowing at unprecedented levels. Any upturn in construction will be critically dependent on an increase in credit availability in the private sector and government spending in accordance with its announced plans on the public side."
Private housing has been the worst affected sector so far and the housing market is not expected to improve soon. The CPA expects that new housing starts will fall to 70 000 this year - the lowest number since 1924.
Public housing starts are anticipated to fall 20% during 2009 as they are linked to the private market.
"The commercial sector has slowed considerably since autumn 2008 and output over the next two years is expected to fall 53% in the newbuild office market and 40% in new retail construction," said Mr Francis.
Positive growth is expected to be seen in publicly-funded areas such as education, health and rail.
"With public borrowing reaching levels that are unsustainable, it is unlikely that public sector construction can grow in the medium-term. Without the Government delivering its public spending commitments, it will miss its targets for housing, schools and hospitals," said Mr Francis
"This could turn the construction recession into a deep depression."
Other key aspects of these forecasts are: industrial properties are expected to fare little better, with factory construction falling 28% and warehouse output falling 23% in 2009 alone; government is expected to miss targets for public housing; education output is set to increase 34% over the next two years and rail output is expected to increase almost three-fold by the end of the forecast period in 2013.