UK construction sector gets new recession warning

Warnings of a double-dip recession are coming from the Construction Products Association, the industry body which claims to represent 85% by value of the manufacturers and suppliers of construction products in the UK.

Based on its latest industry forecasts, the association predicts that construction will be the first major industry sector to fall back into recession following a temporary recovery in the first six months of this year.

Despite strong growth in the spring and early summer, these forecasts show output will fall in the remaining months of 2010, and the decline will continue into the first part of 2011.

Michael Ankers, chief executive of the Construction Products Association, said, "In 2009, the construction industry suffered its sharpest fall in output since 1974, and while there was a bounce back in the first six months of this year, the figures are deceptive.

"The factors that drove this growth - the short term impact of the last government's fiscal stimulus, a tentative recovery in the housing market, and the start of a number of major projects in the run up to the Election - are not the basis for a long-term recovery."

He said the industry needed to see strong private sector growth to offset the significant reduction in public investment that was expected over the next few years. However, he reported that the latest information on new orders for construction work showed recovery in orders for private sector work "go nowhere near" what was needed to offset the expected 18% fall in public sector construction work over the next two years.

"While we can see the prospects for a pick-up in output in 2012 and the following two years," said Mr Ankers, "this recovery is going be slow and will hold back a more rapid growth in the wider economy. Even by 2014, output in the industry will not have recovered to the levels it experienced in 2003."