No significant increase expected until 2012

The outlook for the construction industry has deteriorated sharply over the last three months according to the latest forecasts from the Construction Products Association

Output is expected to fall by a record 16% in 2009, compared with to the April forecast, which indicated a fall of 12%. Prospects for 2010 have also declined with the Association now forecasting a further fall of 5% compared to the previous forecast which showed a fall of 3.4%. The Association does not now expect any significant increase in construction output until 2012 and by the end of the forecast period in 2013 the industry will have recovered only to the levels of output achieved in 1999.

Commenting on the forecasts, Construction Products Association chief executive Michael Ankers said: “Prospects for the industry have deteriorated significantly over the last three months with new orders for construction work falling at a record rate. This year we expect the industry to suffer its largest fall ever experienced in a single year and with a further fall in output in 2010, output will have fallen faster in these two years than in any of the previous post war recessions.”

The sharpest falls in output are predicted in the commercial and industrial sectors with investment in new office, retail and industrial building having come to an abrupt halt. Output on commercial work will have fallen by more than 40% in just two years.

“The only bright spots for the industry are the continued investment by government in its education and health programmes and in the prospect of increased investment in infrastructure, particularly rail schemes, said Ankers. “Without these the industry would be in an even worse state. The real concern is that with the current state of the public finances, cuts in these government funded schemes are almost inevitable after the Election and it is very doubtful that there will be any significant recovery in private sector investment to fill the gap.”

Other key aspects of these latest forecasts are:

• Offices construction to fall by 50% in less than two years

• Retail new build to fall by 42% by the end of 2010

• Rail construction to increase almost threefold by 2013

• Industrial construction in 2011 to be worth less than half its value in 2007.