Record 12% fall in construction output predicted

Industry forecasts released today by the Construction Products Association (CPA) indicate the sector will suffer a 12% fall in construction output - the worst on record - in 2009.

Despite some indicators predicting construction was beginning to turn the corner, the CPA noted that the industry entered 2009 with its sharpest falls in output since 1980 and new orders since 1983.

Forecasts predict the industry will follow a further fall of 3.4% in 2010, with significant positive growth only expected in 2012.

By the end of the forecast period, in 2013, construction output is still expected to be below levels experienced in 2002.

Commenting on the latest statistics, Noble Francis, economics directors at the CPA said: “The current economic recession is now having a major impact on our industry and this is the most serious downturn most of us in the industry have ever experienced.

“We have already lost 60,000 jobs with more expected to follow and an estimated 12,000 construction workers on short time working. Any upturn in construction will be critically dependent upon an increase in credit availability in the private sector and government spending in accordance with its announced plans on the public side.”

Francis added that the CPA anticipated new housing starts would fall to 70,000 this year, the lowest number since 1924. Public housing starts are also anticipated to fall 20% during 2009.

Output in the commercial sector over the next two years is expected to fall 53% in the new build office market and 40% in new retail construction.

Francis said positive growth is would be seen in publicly funded areas such as education, health and rail. But he added that with public borrowing reaching unsustainable levels, it was unlikely that public sector construction would grow in the medium term.

The latest forecasts also said industrial properties would fare little better, with factory construction expected to fall 28% and warehouse output 23% in 2009. Meanwhile, it said the government was expected to miss targets for public housing

On the positive side, education output is set to increase 34% over the next two years, while rail output is expected to increase almost threefold by 2013.