Due to the impact of uncertainty in the post-Brexit construction market the CPA has forecasts ‘Mixed Picture’ for Construction in 2017 and 2018.
The CPA’s latest forecasts highlight a mixed picture for the construction industry over the next two years due to the impacts of the uncertainty following the EU referendum. Overall, construction activity is expected to remain broadly flat in 2017 and 2018, but this masks a more nuanced picture at the sector level with growth in infrastructure and education offsetting falls in activity in sectors such as commercial offices and industrial factories.
In his comments on the residential sector Noble Francis, Economics Director at the CPA, said: “Private house building has not been affected by the uncertainty so far and is expected to rise by 2.0% in 2016. It is anticipated to remain flat in 2017 before a 2.0% fall in 2018 due to slower demand as UK economic growth and real wage growth both weaken considerably next year. However, private house building could be boosted by new measures in the government’s Autumn Statement on 23 November. The slower real wage growth in 2017, driven by higher inflation due to the recent falls in Sterling, is also expected to lead to a decline in retail construction of 4.0% in 2017 and 2.0% in 2018. This in a sector already hit by the shift away from traditional retail towards online shopping.
“With an upcoming Autumn Statement, it is vital that the Chancellor focuses on reducing uncertainty for the private sector, sustaining the housing sector and ensuring delivery of education construction and major infrastructure projects already in the pipeline.”
Key results from the latest CPA construction forecasts include:
- Construction output to rise 0.6% in 2016, 0.3% in 2017 & 0.2% in 2018
- Offices construction to increase 8.0% in 2016 before a decline of 3.0% in 2017 and 10.0% in 2018
- Factories construction to fall 5.0% in 2016 and 2.0% in 2017
- Infrastructure work to rise by 6.2% in 2017 and 10.2% in 2018
- Private housing starts to rise 2.0% but remain flat in 2017 and fall 2.0% in 2018
- Retail construction to fall 8.0% in 2016 before falls of 4.0% in 2017 and 2.0% in 2018