CFR says no growth until '97

Despite some signs of a return of the "feel good factor," overall construction output is still not expected to show any growth until next year at the earliest, according to Construction Forecasting and Research.

A mid-year update of the CFR forecasts for 1996-98 suggests that total output in 1996 will remain at the same level as last year. It is then expected to grow by 1.7% next year and by 2.8% in 1998.

Output of new work this year is forecast to decline by a marginal 0.5%. It is then expected to recover and show increases of 1.5% next year and 3% in 1998.

The CFR predictions are slightly more bullish than their forecasts issued at the beginning of the year. The main difference is that the decline in infrastructure work is now expected to be less severe than was anticipated last winter. Also private housebuilding looks set to record a swifter turnaround, as is repair and maintenance work.

Private housing output is now forecast to show no change this year and to increase by 7% and 5% in the following two years. This compares with the previous forecasts of a 2% decline this year followed by an increase of 3% in 1997.

This is matched by a somewhat sharper decline in prospects for public housing where a 16.5% output fall is forecast for the three year period 1996-98.

CFR notes that "housing is increasingly seen as a long-term investment, not for short term speculation." It further records major changes in the structure of the housebuilding sector with a higher degree of concentration and "a smaller number of more powerful companies in good shape."

Infrastructure work is now expect to decline by 6% in 1996 and by 3% in 1997, with no change in output in 1998. This compares with an earlier forecast of a 10% decline this year followed by a further 2% fall in 1997.

A sustained period of continuing growth is forecast for private industrial building with output increases of 6%, 2%, and 3% over the three-year period. Private commercial output weakened last year with final figures showing a 1.4% decline. But the sector is set to recover in 1996 with a growth of 6% followed by a further 6% in 1997 and 5% in 1998.

Private repair and maintenance for both housing and non-residential work is expected to follow a sustained growth path in the three years to 1998, when together they are anticipated to account for 20% of all construction work.

The CFR forecasting team says its latest predictions take account of the impending election and the possibility of a change of Government. It concludes that Labour policy statements to date do not suggest any major changes in the general economic direction.