What are the Predictions for the Construction Industry in 2014?
The construction industry has been in decline during the past 5 years and early in 2013 it was at its lowest level since2001. The downturn has had a negative impact on related businesses, but things started to look up for this sector during the rest of 2013 which has led to tentative hope for continued progress.
There has been growth within the construction sector for 8 consecutive months and over 50% of construction companies in the UK say they expect to expand their output during 2014. Nevertheless, the production within the building sector is still approximately 10% lower than where it was pre-recession and the outlook from experts isn’t consistent. Hewes has predicted output in construction to continue to fall during 2014 with an insignificant growth in 2015 however Experian expects a small rise this year.
The CPA (Construction Products Association) are the most optimistic when it comes to predictions and foresee a growth of 2.2% in construction productivity which is forecast to continue to strengthen over the following 4 years. Nonetheless, there is the worry amongst construction experts that this growth is unsustainable.
Most agree that there will be proliferation in construction output during 2015 which indicates a crucial pivot of activity at some point this coming year. According to Noble Francis, Economics Director of the CPA, the expected upturn is predominantly due to the expansion in the private housing market which in turn is fuelled by the Government’s Help to Buy scheme. Construction specifically in private housing is predicted to increase by 9% a year on average up to 2017. If this prediction is right, the construction industry can expect to see up to £800 million worth of more work than expected in the coming year. More good news may well follow because the CPA also predicts the construction of factories to be up 42% by 2017.
Other developments within the construction industry are also optimistic following a downturn this past year. The economists Markit and the Chartered Institute of Purchasing and Supply (CIPS) highlighted strong increases in output within the commercial and civil engineering sectors of the construction industry. During the first quarter of 2013 infrastructure output was at its lowest level since 1999, but is expected to play a part in the growth in the construction industry during 2014.
There will be an anticipated rise in Crossrail and train station refurbishments all over the UK which will supposedly boost rail infrastructure to 41% and by 2017, energy infrastructure is set to surge to 89%.
An expansion in construction means more work not just for all personnel directly involved in this wide ranging industry, but also affiliated businesses such as fit out companies and spray painting professionals. The downside is that public sector construction is expected to fall, but this isn’t necessarily bad news for those aforementioned affiliated businesses. Public sector buildings already in use will need to be protected and refurbished because there won’t be the funding for wholesale replacement. Furthermore, there are still a large number of vacant properties ripe for development in the public sector as well as in retail. A small amount of money can often be found for re-coating architectural metalwork which is necessary for protecting buildings as well maintaining aesthetic appeal or re-branding. These seemingly small restorations save money in the long run and play an important economic part in the commercial sector and recovery in general.