Construction output will be down 6% in 2008

The June 2008 Leading Edge forecast predicts that the credit crunch, combined with cost inflation is going to drag the construction industry’s 2008 output down 6% in real terms.
The credit crunch, the high cost of energy and falling confidence are set to affect all the private sectors.

Housing is going to be the worst hit with housing transactions down by 33% and private & public sector housing starts only reaching 162,000. This is going to have a massive impact on new housing construction output and, unusually, will reign back RMI spend.

In the commercial and industrial sectors, the lack of funding has arrived at a time of rising costs and fading confidence and, in markets already starting to cool, will combine to depress output further.

Meanwhile the public sector is powering ahead, driven by political will and Olympic promise. However, we anticipate that in the new climate, the burden of the Olympic spend is going to have to be met from other budgets, putting a dampener on elsewhere, most likely infrastructure.

Because of the different sectors moving at different speeds, contractors and materials’ manufacturers are going to have shift their marketing emphasis. Some heavyside materials like ready mixed concrete probably won’t fare as badly as some types of blocks.

For more details of our Construction Forecast for 2008 –