Construction is set to shrink by £2 billion this year following an £8.7bn drop in 2012, according to Construction Products Association forecasts.
The figures show construction output falling 2.1 per cent this year following a decline of 8.1 per cent in 2012.
However, the association expects the industry to grow by 1.9 per cent in 2014 and 3.8 per cent in 2015.
The recovery of construction’s largest sector, commercial, has been delayed for a year in the latest forecast compared with the association’s previous set of predictions published in January.
Commercial is now expected to shrink by 6.6 per cent this year and 0.8 per cent next year. By 2015 the association expects commercial output to have dropped by £3.4bn compared with 2011 levels.
However, the association expects better times for infrastructure and private housing. Infrastructure is expected to grow by 6 to 7 per cent a year to 2016.
Construction Products Association economics director Noble Francis said funding for roads repairs, announced in the 2012 autumn statement, ought to translate into work fairly quickly.
The association says private housing could be lifted by measures in the Budget such as Help to Buy, which provides equity loans and mortgage guarantees to homebuyers, while past policies such as Funding for Lending could stimulate a rise in housebuilding this year.
The association expects private housing starts to rise by 8 per cent in 2013, 10 per cent next year and by 12, 9 and 8 per cent in the following years. That follows a 7 per cent fall in starts in 2012.
Dr Francis said: “Overall, 2013 is anticipated to be extremely challenging. From 2014 prospects are brighter for the industry, but the key risk is the extent to which government announcements feed through to activity on the ground.”
Meanwhile sales of key construction materials fell sharply in the first three months of 2013, new figures show.
Asphalt sales dropped 18 per cent first quarter of 2013 compared with the same period a year earlier, according to the Mineral Products Association.
Its members’ survey also found that aggregates sales dropped by 8 per cent and ready-mixed concrete sales fell 4 per cent in that time.
Small builders cut jobs
Almost a third of Britain’s small building firms have lost staff as workloads have fallen, according to a survey by the Federation of Master Builders.
The FMB’s State of Trade survey found the proportion of firms that had shed staff rose from 27 per cent in the final quarter of 2012 to 30 per cent in the first three months of 2013.
It also found the proportion of firms reporting a fall in workloads rose to 39 per cent in the first quarter of 2013 from 31 per cent three months earlier.
But the survey showed SMEs were more optimistic about workloads for the next quarter, with 26 per cent expecting a rise compared with 17 per cent in the previous survey published at the end of 2012.
FMB chief executive Brian Berry said: “These latest survey results… paint a bleak picture, and our members are telling us that they are faced with the unenviable choice of putting up their prices or laying off staff.”