CPA Predicts Construction Growth

Construction output in the UK is likely to head upwards in the near future, new estimates suggest.

According to a report by the Construction Products Association (CPA), the industry should see a 3.4 per cent increase in output during 2014. This will be followed by a 5.2 per cent upturn in the following year.

The surge is expected to be fuelled by increased private house building, as well as greater commercial activity and work on infrastructure projects.

Building activity has "picked up considerably"

Dr Noble Francis, economics director at the CPA, noted that activity in the construction sector has "picked up considerably" since the beginning of last year.

This, he said, was driven initially by a strong upturn in house building. However, Dr Francis noted that the increase in commercial activity in places such as London, as well as the growth in new infrastructure, has helped to supplement this in subsequent months.

"The construction industry is in a very different place to just one year earlier, when output fell to a level 15.4 per cent below its pre-recession peak," he commented.

Dr Francis described the recovery in the private housing sector as "rapid", since the number of housing starts went up by an estimated 24 per cent during 2013.  

Forecasts from the CPA now suggest that a 16 per cent increase will occur during 2014, followed by a ten per cent surge next year. The upturn has been attributed to a number of factors, including the government's Help to Buy initiative and an improvement in the wider economic climate.

The infrastructure sector was flagged up as one of the main drivers of construction growth during the second half of 2013. Output in this segment of the market is now tipped to go up by 39.7 per cent over the next three years, due to a renewed focus on rail construction and road maintenance.

Increased investment in energy infrastructure should also support growth in the near future, the CPA stated, due to major projects such as the creation of a nuclear reactor at Hinkley Point C in Somerset.

Genuine recovery taking place

Dr Francis added that the private commercial sector was boosted by a number of major office projects in the capital during 2013.

As a result, he is confident that a genuine recovery is now taking place, following a 33.1 per cent slump between 2008 and 2012. The CPA believes output in this sector went up by 2.4 per cent during 2013 and is predicting a 2.7 per cent increase this year.

Dr Francis added that in 2015, the sector will be boosted by growing demand for prime office and retail space outside London and south-east England, as well as a further improvement in the UK economy.

The CPA's forecasts come after the Office for National Statistics reported that construction output went up by 2.2 per cent in October 2013 and by 5.3 per cent year-on-year. As a result, the organisation is confident that the industry will experience growth in 2014.

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