Slight fall forecast for '96

Total construction output is set to decline by 1% this year as the recovery in the private sector fails to offset the cuts in Government spending, according to the latest quarterly survey by the Building Material Producers.

The private housing sector is showing signs of recovery, but output is expected to still be down 1.5% this year. However, the market is expected to rise by 10.5% in 1997 in line with a general improvement in the economy and greater consumer confidence.

Private housing repair, maintenance and improvement is expected to rise by 3% this year and in 1997. Public housing remains depressed following severe cuts in the Housing Corporation's budget. A fall of 16.5% is expected this year and 7% in 1997. Public repair and maintenance will also drop by 4% due to the continuing squeeze on local authority funds.

Infrastructure output continues to decline as the heavy cuts in the roads programme take effect and the impact of PFI schemes has yet to make its mark. Water and sewerage, gas, communications and rail projects have helped the sector, but a 4% decline overall in 1996 and a further 2% in 1997 is expected. Cuts in the road maintenance budget will depress public non-housing repair and maintenance by 7% in 1996.

On the plus side output in the commercial sector is expected to rise by 5% this year and 8% in 1997, with the central London office market particularly encouraging. The industrial sector is forecast to rise by 6% in 1996 and 1997. Figures are partly boosted by large inward investment schemes, but the BMP believes domestic investment industrial will rise in 1997.

Both the education and health sectors remain stagnant because of the hiatus in switching to PFI driven schemes rather than public funding - a decline of 7% is expect in 1996. The BMP estimates there is a pool of around œ2 billion worth of new hospital work waiting to go, but little of this is expected to start on site until 1997.

l see also page 12