Flooring news
Double dip recession forecast for industry
CONSTRUCTION output volume in 2011 is forecast to decline by 2.3% on 2010, says construction research specialist Leading Edge. The fall is mainly a result of a reduction in output in the public sectors as the government cuts start to bite.
On the positive side, however, the 2011 forecast of £98,400m is 3.9% higher than 2009 at constant prices and higher than 10 of the 15 preceding years. However, it will still be 9.0% below the 2007 peak. The 2011 forecast increased slightly compared to the forecast made in 2010, partly due to an improvement in many of the leading indicators in the private sector.
Leading Edge expects to see major falls in output in all the public sectors in 2011, including both new build and R&M, as the government’s cuts start to bite. However, it expects all the private sectors to see growth during 2011, which will offset some of the falls in the public sectors
Leading Edge forecasts that all the private sectors including housing, commercial, industrial and infrastructure will see real output growth during 2011.
In particular the private housing sector will see the highest growth rate this year, while output in the commercial sector will be encouraging, despite many of the projects associated with the Olympics coming to an end.
With actual figures to hand, it notes that total construction output in GB in 2010 was £100,824m at constant 2005 prices, up by 6.4% on 2009. This was higher than most commentators were predicting, mainly because of the strong performance in the public sector throughout 2010.
Construction output in Q4 2010 was up 7.9% on 2009, while output in Q3 and Q4 combined was up by 9.6%.TotalnewordersinQ42010 were up by 4.4% on a year earlier, while the figure for Q3 and Q4 combined was down by 4.9%. The fall was mainly due to a
strong performance by infrastructure in the latter part of 2009.
Looking beyond 2011, the forecast is that 2012 will see a further fall in total output of 0.5%, although this is still £3,200m above the 2009 figure.
From 2012 onwards the growth in the private sectors will outweigh the decline in public output and growth will return to total output in 2013. Asfortheprospectsfurther ahead, Leading Edge forecasts that output for 2015 will be £104,300m, still over 7.5% lower than the 2007 peak of £108,300m (at constant 2005 prices) but higher than 10 of the 15 preceding years.
Mel Budd, md at Leading Edge, comments, ‘although we expect the economy to maintain its slow but steady growth in 2011, the construction sector will suffer from a double dip recession due to the deep cuts in the public sector’s capital spending.
‘Overall, we forecast a decline in output volume in 2011 followed by slow growth for the construction industry as a whole from 2013 onwards. Total output in 2015 will be around 3.5% higher than 2010’.
Mel Budd
For more details of the Leading Edge UK Construction Forecast for 2011 – 2015, go to the website:
www.lead-edge.co.uk
T:01252279990
E: mel.budd@lead-edge.co.uk
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