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Products body signals industry slowdown

Construction output in set to slow to less than 1 per cent in 2005 and 2006, the latest forecast from the Construction Products Association has revealed.
It has revised its prediction for 2005 from 0.8 per cent to 0.6 per cent and its 2006 forecast down from 2.4 per cent to 0.9 per cent. Overall the industry will avoid recession but growth is dependent on promised government spending.

The association said it has major concerns over the housing sector where it is forecasting housing starts over the next 3 years will be below 2004 levels, and lower than the long term supply the Barker Review said was needed to address the chronic housing shortage in the UK .

On a brighter note, construction's fortunes are expected to turnaround in 2007 with a forecasted increase of over 3 per cent.

Private housing repair maintenance and improvement work is expected to fall in both 2005 and 2006 by 4 and 2 per cent respectively, due to a drop in consumer spending. A modest recovery in office development work is predicted for the next three years while the retail and entertainment sectors are likely to weaken.

Difficult domestic and overseas trading conditions for UK manufacturers will dampen industrial building work over the same period, the association predicted.

Higher Government investment in education and health is forecast to lift both public non-housing activity and the flow of PFI projects. And a sustained rise in social housing investment could lift new public housing starts from 19,000 homes last year to 25,000 in 2007, supporting a steady increase in public housing repair and maintenance over the next three years.

The Highways Agency's investment programme will generate a modest upturn in road construction, with 2 per cent growth this year and 8 per cent in 2006.

Planned capital expenditure by water companies is expected to take longer to materialise with output due to fall 5 per cent this year before rebounding in 2006 and 2007, up 5 and 10 per cent respectively.

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