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CPA forecasts show depth of construction slump

Construction output will fall by 16% by the end of this year, with no significant upturn until 2012, according to the latest forecasts from the Construction Products Association, published today.
This forecast is gloomier than the one Association released in April which was only a 12% decline. For next year, the Association are now forecasting a further fall of 5% compared to the previous forecast of 3.4%.

The CPA does not now expect any significant increase in construction output until 2012 and by the end of the forecast period in 2013, believes the industry will have recovered only as far as 1999 levels.

“This year we expect the industry to suffer its largest fall ever experienced in a single year and with a further fall in output in 2010, output will have fallen faster in these two years than in any of the previous post war recessions,” said CPA director Michael Ankers.

“Although the private sector housing market has experienced some small improvement over the last few months, such is the scale of the downturn that we are still only forecasting there will be 72,000 new houses built this year, the lowest figure since 1924 and over 20% below the number started in 2008. The sharpest falls in output are in the commercial and industrial sectors with investment in new office, retail and industrial building having come to an abrupt halt. Output on commercial work will have fallen by more than 40% in just two years.

“The only bright spots for the industry are the continued investment by government in its education and health programmes and in the prospect of increased investment in infrastructure, particularly rail schemes. Without these the industry would be in an even worse state. The real concern is that with the current state of the public finances, cuts in these government funded schemes are almost inevitable after the Election and it is very doubtful that there will be any significant recovery in private sector investment to fill the gap.”

Other key aspects of these latest forecasts are:

· Offices construction to fall by 50% in less than two years.

· Retail new build to fall by 42% by the end of 2010.

· Rail construction to increase almost threefold by 2013.

· Industrial construction in 2011 to be worth less than half its value in 2007.

About Fiona Russell-Horne

Group Managing Editor across the BMJ portfolio.

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