Construction boom slowing down

The boom in UK construction appears to be over, Experian Business Strategies has warned following its latest forecasts for the construction industry.

After achieving 8% growth in 2002 - four times that of the whole UK economy last year - growth in construction output is set to increase by just 5% this year and 2% in 2004.

The reduction will be as a result of falling levels of activity in industrial and office construction and in private house building.

However, construction in the transport, education, health and social housing sectors will continue to rise even though it is highly unlikely that the high levels of growth experienced in 2002 will be maintained.

James Hastings, associate director at Experian Business Strategies, said: "While construction activity is being boosted by the Government's commitments to improving public services and social housing, private sector work is now thinner on the ground.

"There is likely to be a sharp contraction in office construction following the slowdown in the office market in London and the South East and the decline in corporate investment.

"House building is expected to fair well this year as many houses were forward sold during the boom, but as the housing market continues to cool, output is expected to stagnate in 2004," he said.

The prospects for industrial construction remain weak, while public non-residential construction is expected to be the star performer in the industry, fuelled primarily by expenditure on education and health facilities.

The forecast for construction output compares with GDP growth of 1.8% in 2002 and forecast growth of 2.2% this year, 2.6% in 2004 and 3% in 2005.