Construction to bounce back to growth in 2014

The construction sector will return to strong growth from next year, according to the latest forecasts from the Construction Products Association (CPA).

The CPA has forecast that construction output will grow 2.2% in 2014 – after contracting 1.5% this year.

This will be followed by 4.5% growth in 2015, 5% growth in 2016 and 4.7% in 2017, the CPA predicts.

The forecasts represents upward revisions from the CPA’s last output forecasts in April, when it said output would fall more sharply this year, by 2.1%, and grow less over the next four, by 1.9%, 3.8%, 4.7% and 4.5% respectively.

CPA economics director Noble Francis said the upward revisions were primarily due to forecast expansion in the private housing sector.

The CPA predicts the housing market will continue expanding strongly, with private housing starts anticipated to rise 15% in 2013, with growth through 2017 averaging 9% per year.

Infrastructure is also expected to be a key driver of growth from 2014. However, construction output fell to its lowest level since 1999 in the first quarter of 2013.

Francis said: “The industry has suffered greatly over the past five years and earlier this year saw its lowest levels since 2001. Even with growth in the second half of this year, output is set to fall 1.5% for 2013. However, our forecast is for construction to recover from 2014. Growth over the next 12-18 months is predominantly due to a surge in housing sector activity, which is benefitting from the Help to Buy scheme. 

“Help to Buy has clearly stimulated demand and led to increasing supply from housebuilders. We forecast housing starts will rise 39% by 2015.”

Other key points –

• Factories construction to rise 42% by 2017 driven by manufacturing and exports growth
• Rail infrastructure to rise 41% by 2016 driven by Crossrail and station refurbishments around the country
• Energy infrastructure to rise 89% by 2017 • Public sector construction to fall 5.2% in 2013 after an 11.4% fall last year.