Construction industry facing worst fall on record

Construction industry forecasts for the coming year indicate the sector will suffer a 12% fall in output - the worst on record, followed by a further fall of 3.4% in 2010. Significant positive growth is only expected in 2012 and by the end of the forecast period, in 2013, construction output is still expected to be below levels experienced in 2002.

The latest industry forecasts come from the Construction Products Association. Noble Francis, economics director 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.”

The report says that 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.

The Association anticipates that new housing starts will fall to 70 000 this year, the lowest number since 1924. Public housing starts are anticipated to fall 20% during 2009 as they are intrinsically linked to the private market. The commercial sector has slowed considerably since autumn 2008 and output over the next two years is expected to fall 53% in the new build office market and 40% in new retail construction.

Positive growth is expected to be seen in publicly funded areas such as education, health and rail. However, with public borrowing reaching levels that are unsustainable, it is unlikely that public sector construction can grow in the medium term. “Without delivering its public spending commitments, government will miss its targets for housing, schools and hospitals,” said Francis. “More importantly, this could turn the construction recession into a deep depression.”

Other key aspects of these latest forecasts are:

• Industrial properties are expected to fare little better with factory construction falling 28% and warehouse output falling 23% in 2009 alone

• Government is expected to miss targets for public housing

• Education output is set to increase 34% over the next two years

• Rail output is expected to increase almost three fold by end of Forecast period in 2013.