UK Construction Output Forecast 2009

UK Construction Output Forecast 2009 - 13

Product Type: Market Research Report
Published by: Leading Edge Management Consultancy Ltd.
Published: July 2009
Product Code: R3655-2

Description

Construction output forecast to be in decline until 2012

The GB construction industry forecast recently issued by Leading Edge predicts a fall in total construction industry output of 15.0% in 2009, compared to 2008, giving a figure of £93.3bn (at 2005 prices). The following two years, 2010-2011, are forecast to see a further combined fall of 5.2% in total construction output before returning to growth in 2012. However, there are marked differences in the relative performance of individual sectors over the next four years.

The new build commercial and industrial sectors are now being hit as hard in 2009 as housing was during 2008. Consumer confidence and demand have disappeared along with the flow of money that supported the construction boom up until 2007. This has seen output and orders plummeting to worryingly low levels over the last 12 months.

In 2009, Leading Edge forecasts that the industrial sector is going to be the worst hit with construction output down by 32%. Added to this, new housing and commercial output are both forecast to see significant falls. This will make the private sector a bleak place to be operating in during 2009. However, there are some bright spots for this year - notably in the public sector and in infrastructure. The infrastructure sector will build on a strong performance in 2008, driven by the Government’s drive to pull spending forward to beat the recession.

The public sector will also benefit from a continued increased spend in education and health and the fast-tracking of major projects. However, we anticipate that in the new climate, the burden of the ballooning public sector deficit and the general election due next year is going to have to be met by reduced spending from 2010 onwards.

Even though housing is forecast to return to growth in 2010, the fall in the public sector spending will cause total construction output to fall again next year, albeit by smaller amount than in 2009. Even the normally recession resilient repair and maintenance market will continue to see falls in output between 2009-2011, although the damage will be less severe when compared to the ‘new build’ sectors.

The toll of the stalling housing, commercial and industrial markets and the impact of the credit crunch on property development will weigh heavily on building materials where sales are skewed towards these sectors. These materials include bricks, blocks and cement and we forecast, for example, brick sales to be down by almost 26% in 2009 from 2008’s decline in sales of 25%.

With the market sectors moving at different speeds, contractors and building materials manufacturers are going to have start looking at opportunities in new markets to ensure they are best placed to take advantage of the upturn when it eventually emerges.

Table of Contents

1.Executive summary
2. The world and UK economy
3. Forecasts by main construction sector: a new housing; b new commercial; c New public; d new industrial; e New infrastructure; f RMI Housing; g RMI Non housing
4. Forecasts by selected building materials sector(Bricks, Cementitious materials, Concrete blocks, Ready mixed concrete)

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