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Construction Products Association hikes 2014 output forecasts

Housing and infrastructure are expected to continue to power the construction industry’s growth, according to the spring update of the Construction Products Association forecasts.

Construction output is now forecast to grow by 4.5 per cent this year, an upgrade from the 3.4 per cent figure published in the association’s winter update.

Output is then set to grow by 4.8 per cent in 2015, before a slight slowing to 4.3 per cent in 2016 and 3.6 per cent in 2017.

These three years have seen a slight downgrade on the winter update owing to the continuing increase in positivity over growth this year.

The forecasts mean construction output is expected to grow 18 per cent overall by 2017.

Construction Products Association economics director Noble Francis said there were more changes in the spring update than perhaps expected due to the “improvements in the wider economy and a more positive private sector”.

Growth is forecast to have a broader base than was envisaged a year ago, but the most prominent changes to the forecasts are for private housing and infrastructure. The two sectors are still driving the industry’s growth, being propped up by commercial.

Private housing starts are forecast to rise by 18 per cent this year and 10 per cent next year before slowing, which Dr Francis attributed to potential uncertainty following the general election in May 2015.

“We have had to assume that whoever is in power will carry on with Help to Buy,” Dr Francis said. “However, none of the other parties have explicitly come out and said they will stop it.”

Forecasts for growth in public housing starts have been upgraded to 8 per cent in 2014 and 5 per cent in 2015 due to growth in private markets leading to an expected increase in social provision via section 106 agreements.

Infrastructure projections have seen some alterations amid the continuing uncertainty around nuclear works, particularly with Hinkley Point C, Dr Francis said.

The sector’s forecast output growth for this year has been upgraded to 10.1 per cent from the 6.8 per cent forecast in the winter.

Expectations for infrastructure output over the next three years have been downgraded, with the association now anticipating 7.2 per cent growth in 2015, down from 9.5 per cent.

“2014 has been upgraded because of an increase in orders and decommissioning work. We now assume Hinkley main works output to fall in to the back end of 2015, but primarily into 2016 onwards,” Dr Francis said.

He cites the ongoing investigations into Hinkley Point C and the big six energy firms, by the European Commission and Ofgem respectively, as potential hindrances to investment into new energy.

The forecasts do not account for Wylfa power station in Anglesey, with main works not expected to start before 2017.

However, the electricity sub-sector is still forecast to grow by 39 per cent by the end of 2017.

Among the new schemes to start last week was one of the largest coastal defence projects in the UK. The £73m project on the Fylde Coast at Rossall and Anchorsholme (pictured), being built by Balfour Beatty, will renew 2.9 km of sea-walls and the promenade and preserve its beaches.

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