Forecasting firm says pessimism is due to impact of negative sentiment in wake of euro crisis
Construction forecasting firm Experian has given notice that it is likely to revise down its forecasts for construction output in 2012 when it gives its annual forecast in the new year.
James Hastings, head of construction futures at Experian, said the firm is likely to downgrade its forecasts in the wake of growing pessimism over the state of the wider economy, in the light of the euro crisis.
2012 is going to look worse than it does now when we revise at the end of the year
James Hastings, Experian
Issuing interim data this week, which showed a prediction for 2011 marginally up on the figure produced in the summer, Hastings said a slower than expected decline in public spending so far had helped keep output going, but meant spending was likely to fall even further next year.
Experian currently predicts a 3.3% decline in output for 2012. Hastings said: “The chances are that 2012 is going to look a little bit worse than it does now when we revise at the end of the year. The impact of the drop in confidence we’ve seen is likely to see a worse scenario for private commercial work, and possibly for housing as well.”
Overall Experian is now predicting that output will decline by 2.1% this year, compared with the predicted annual fall of 2.6% made in the summer. Hastings said this was largely because the way the predictions are compiled does not allow Experian to feed in the negative sentiment data until the revisions at the end of the year.
Hastings added that the predictions assumed Greece will avoid an uncontrolled default on its debt. “If there’s a nightmare scenario there then all bets are off and forecasts will be significantly worse.”
Experian’s report said the outlook for the UK economy had “darkened considerably due to its exposure to the eurozone government debt and banking sector crisis,” and that the housing market remained “very fragile.”