A new survey has predicted that construction output growth will slow to less than 1% during both 2005 and 2006

The Construction Products Association said there would be a turn-around in 2007, when growth is forecast to increase to over 3%. Michael Ankers, chief executive of the CPA, said: “Private sector construction activity is set to fall over the next two years in response to weakening economic growth. In particular, slower growth in disposable income, higher mortgage rates and a cooling housing market are now tempering related construction areas such as housing, retail and leisure premises.”

“Overall, the construction industry is forecast to avoid recession, but continued growth will be critically dependent upon the delivery of promised government investment,” he added.

His views are echoed by Allan Wilén, economics director with the CPA. “A lot hinges on public sector expenditure, which is predicted to grow by 4.6% this year, and 6.8% during 2006.”

During the election campaign, the Labour Party committed itself to continuing its programme of investment.

One of the CPA’s main concerns remains the housing sector. “We are forecasting housing starts in each of the next three years to be below those in 2004, and significantly lower than the long term supply the Barker Review said was needed to address the housing problems of this country,” Wilén concluded.

Source

QS News