Economic forecaster Experian Business Strategies has again revised downwards its estimates for construction output for the next two years
The latest quarterly data, published in this week’s Building, indicate that the worst is yet to come, with deep falls predicted in workload this year, next year and in 2011.
Experian is now predicting that output in this year will fall by 12.8% to £95.7bn, compared with its July prediction of 12%. The reason for the revision is worse than expected declines in the private industrial and commercial sectors.
One bright spot is that the declines in 2010 and 2011 have decreased by 0.4 of a percentage point to show a 0.6% and 1.7% decline respectively. This is largely because of an upward revision in 2011 private industrial output from –2% to 5%, as Experian believes further falls in the sector are unlikely after a predicted 2009 contraction of 38%.
Experian repeated warnings that macroeconomic factors could send any recovery into reverse. These include inflationary pressures, weak global trade, public sector cuts and rising unemployment.
The predictions assume that large public projects, including Crossrail and Building Schools for the Future, will survive the likely change of government in a June election.
The forecast of a 2011 recovery relies on a rebound in housing output. Experian expects non-residential work to fall 4.3% and 2.0% in 2010 and 2011.
Simon Rawlinson, head of professional development at Davis Langdon, suggested the forecast might only see as far as the next contraction. “Where will the sustained recovery come from in 2012 and 2013 given the inevitable cuts in public spending?” he asked. “The real shocks may be off the page.”
His comments echoed a report from the Construction Products Association, released earlier this week, that predicted that there would be no boom until 2021. It also calculated that the industry would shrink 15% this year, the sharpest contraction since 1948.
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