Decade of growth shudders to a halt

Construction output will go into decline next year for the first time in 12 years, according to the Construction Products Association's (CPA) latest forecast.

The forecast predicts that output growth, estimated to be 3.8% last year, will slow this year to 1.5%. But in 2005, output will fall back by -0.7%. The CPA expects growth to resume in 2006 at 1.4%.

CPA chief executive Michael Ankers said: "Overall, the construction industry is expected to avoid recession because of higher government investment in the built environment.

"However, statistical rules will artificially depress the official figures as rail maintenance contracts are brought in-house by Network Rail and are excluded from the construction output statistics.

"This will trim 1% for total construction output this year and next," Ankers said.

The CPA expects the private sector to continue to decline for the next two years, by 1.5% and 2.8% respectively, then increase  by just 0.8% in 2006.

"Although private sector growth is forecast to constrain construction activity over the next three years, government spending continues to keep the industry optimistic, with public sector output forecast to increase by 7.5% in 2004, 3.1% in 2005, and 2.5% in 2006," Ankers said.

The CPA forecasts private housing growth will drop from 3% this year to -2% in 2005 and 0% in 2006.

CPA construction output growth forecast 2004/2005/2006

• Public housing 12%/10%5%
• Private housing 3%/-2%/0
• Infrastructure 1%/3%/2%
• Public non-housing 12%/1%/0
• Industrial 0/3%/5%
• Commercial -5%/0/1%
• RMI 1%/-3%/2%
• Total 2%/-1%/1%