CPA: Construction output falling faster than at any time since early 80s
The construction industry is set for its biggest decline in nearly 30 years according to the latest forecasts of construction output published today by the Construction Products Association. Output is set to fall by nearly 9% in 2009 and a further 4% in 2010 – a greater fall than at any time since the early 1980s.
Commenting on these latest forecasts, Michael Ankers, Chief Executive of the Construction Products Association said: “The speed of decline is having a dramatic effect on many parts of the construction industry and is being driven by an unprecedented reduction in private sector investment resulting from the credit crunch and economic downturn. Private housing starts which fell 43% in 2008 are expected to fall another 32% in 2009, to levels not seen since 1952. Private commercial work has collapsed as the retail sector cuts back on its investment plans in the face of falling sales. Orders for new offices have fallen 47% and as a result we are forecasting that construction output on office projects will fall by 50% over the next two years.
“The only sectors where construction output is forecast to increase are linked to public spending. The Building Schools for the Future programme has finally got off the ground and spending on education projects is expected to grow by 28% over the next two years. Construction activity in the health sector will remain strong and we are also forecasting an increase in construction output on infrastructure projects throughout the forecast period with the Crossrail project playing an increasingly important part towards the end of our forecast period.”
The Association is not expecting industry output to begin to increase until the second half of 2010. Recovery is expected to gather pace slowly as increasing private sector investment is offset by cut backs in public spending and the government tries to rebalance its books following the large increase in the borrowing requirement during the recession.
Commenting further on these Forecasts, Ankers said:
“The key message from these forecasts is that the construction industry is heavily reliant on public sector spending to sustain even these reduced levels of activity. Without the anticipated increase in public sector programmes, the industry would be faced with a 15% fall in output over the next two years – the kind of reversal that the industry has not experienced in more than 60 years.
“We are therefore pleased that government has recognised the key role construction can play in leading the country out of recession by bringing forward £3billion of capital spending in the Pre-budget Report, as well as the more recent announcement by the Prime Minister highlighting the importance of construction projects in creating 100,000 new jobs. Spending on construction projects does create more employment than many other sectors of the economy and is more likely to draw on goods manufactured in the UK. It also provides the infrastructure and education facilities key to ensuring we have a productive and competitive economy as we move out of recession.
“We are still concerned, however, that the political rhetoric is not being matched by efficient delivery of these projects on the ground. The government’s priority at this time must be to improve credit availability and the mechanisms for delivering public sector projects.”
Other key aspects of these latest forecasts are:
. New construction work to fall 10% in 2009.
. No recovery in total construction output until 2012
. Total housing starts (private and public) to fall to lowest level since 1924 (excluding World War II)
. Private housing repair, maintenance and improvement to fall 15% during 2009
. Rail construction work to increase 190% over the next five years
. Public non-housing construction output to rise 22% in the next two years
ENDS
NOTE TO EDITORS:
The Construction Products Association represents the UK’s manufacturers and suppliers of construction products, components and fittings. The Association acts as the voice of the construction products sector, representing the industry-wide view of its members. The sector has an annual turnover of £40 billion and accounts for 40% of total construction output.
FOR FURTHER INFORMATION CONTACT:
Simon Storer. Communications and External Affairs Director
Construction Products Association
Tel : 020 7323 3770
Fax : 020 7323 0307
Mobile : 07702 862 257
E-mail : simon.storer@constructionproducts.org.uk
Michael Ankers Chief Executive
Construction Products Association
Mobile: 07887 897 581
Fax: 020 7323 0307
E-mail: michael.ankers@constructionproducts.org.uk
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