The Construction Products Association’s (CPA) latest forecasts highlight a mixed picture for the construction industry over the next two years due to the impacts of the uncertainty following the EU referendum.
Overall, construction activity is expected to remain broadly flat in 2017 and 2018, but this masks a more nuanced picture at the sector level with growth in infrastructure and education offsetting falls in activity in sectors such as commercial offices and industrial factories.
Specifically, the forecast predicts construction output to rise 0.6% in 2016, 0.3% in 2017 & 0.2% in 2018. This will be led by a 6.2% and 10.2% rise in infrastructure in 2017 and 2018, respectively, and hindered by a move from +8.0% to -10.0% in offices construction from 2017-2018.
Private housing starts are expected to rise 2.0% but remain flat in 2017 and fall 2.0% in 2018.
Noble Francis, economics director for the Construction Products Association, commented: “Surveys across the industry highlight that activity in the construction sector has been sustained post-referendum, primarily based upon work on projects that were signed in the 12-18 months before the referendum. Looking forward, projects in the pipeline mean that construction activity is likely to continue throughout the rest of 2016 and the first half of 2017.
“From the second half of 2017, however, there is likely to be a clear division between the fortunes of privately-funded construction sectors – such as commercial offices and industrial factories – where the current uncertainty is likely to have a major impact, and those that are largely unaffected by post-referendum uncertainty – such as infrastructure and education – which are either publicly-funded or in regulated sectors.”
“With an upcoming Autumn Statement, it is vital that the Chancellor focuses on reducing uncertainty for the private sector, sustaining the housing sector and ensuring delivery of education construction and major infrastructure projects already in the pipeline.”
