Construction output is expected to grow over the next few years, despite further pressures from reported rises in raw materials prices in Q4 2016.
The Construction Products Association (CPA) has predicted that construction output is expected to grow by 0.8% in 2017, 0.7% in 2018 and 2.2% in 2019.
In particular, growth to 2019 is expected to be primarily driven by a 28.0% increase in infrastructure activity and a 6.1% increase in private house building, which would offset expected falls in commercial and industrial construction.
Noble Francis, economics director at the CPA, said: “Near-term prospects for construction appear bright with industry growth boosted by several new billion pound infrastructure projects across the country such as the Thames Tideway Tunnel, HS2 and Hinkley Point C and the Government’s £23 billion National Productivity Investment Fund. A rise in infrastructure output is expected to ensure positive growth for the construction industry overall if the Government can ensure it delivers on its announcements.”
House building is also expected to remain a key source of output growth, with private house building starts rising at 2.0% per year between 2017 and 2019.
The latest figures from the Office for National Statistics (ONS) have supported the predicted growth figures as it was revealed that construction output rose by 1.8% in December compared with November 2016 and 0.6% year-on-year.
However, the CPA’s Construction Trade Survey Q4 showed that overall costs increased for 88% of civil engineering contractors, whilst 75% of main contractors, 78% of heavy side manufacturers and 88% of light side manufacturers also reported a rise in raw materials costs.
The latest statistics also highlighted a skills shortage affecting key on-site trades with main contractors reporting shortages of carpenters and plasterers at their highest in nine years.
Commenting on the survey, Rebecca Larkin, senior economist at the CPA, said: “The construction industry closed 2016 on a strong note, with activity improving for firms throughout the supply chain. However, order books and enquiries were lower for contractors and signal a weaker outlook for 2017.
“Cost pressures continued to rise, particularly for imported raw materials, and compound the risks that activity will be unable to grow at current rates over the next 12 months. The construction products manufacturing industry is responsible for directly employing 280,000 people and whilst government has a role to play in providing certainty for projects, industry will need to find ways to navigate rising costs.”
