Near-term decline in UK construction output forecast

The Construction Products Association has forecast a -2% decline in UK construction industry output next year and predicted a further contraction in 2012 amid sharp falls in public sector investment.

The Association, which represents 85% by value of all manufacturers and suppliers of construction products in the UK, predicted a recovery in construction output would be stalled until 2013.

Chief executive Michael Ankers said, "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."

Private sector construction in the UK is forecast to increase by +5% in both 2011 and 2012, but this projected growth would not offset the -17% fall in public sector construction forecast by the Association over the next two years.

"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," Mr Ankers said.

However, a turnaround is forecast beyond 2012.

The Construction Products Association expects commercial sector construction output to rise +20% between 2009 and 2015, while rail construction is forecast to double by 2015 and energy construction is expected to treble by 2015.

"By 2013 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," Mr Ankers said.