Construction output will be down over 10% in 2009

A Leading Edge Management Consultancy product story

Edited by the Buildingtalk editorial team Jan 9, 2009

GB construction industry forecast recently issued by Leading Edge predicts a fall in total construction industry output of 10.2% in 2009 compared to 2008 giving a figure of GBP73.1bn (at 2000 prices).

This is on top of an expected fall of total output of just over 1% in real terms in 2008, as the growth in total output seen in the first three quarters turned into a downward slide for the final quarter.

The new build private sectors, especially industrial and housing, have been hit particularly hard in 2008.

In 2009 Leading Edge forecasts that housing is going to be the worst hit with completions down by 54% and private and public sector starts only reaching 80,000, the lowest level since World War II.

This is going to have a massive impact on new housing construction output and, unusually, will also reign back RMI housing spend.

In the commercial and industrial sectors, the lack of funding has arrived at a time of rising material costs and fading confidence which, in markets that have already starting to dive in 2008, will combine to depress output even further.

However, there are some bright spots - notably in the public sector and in infrastructure.

The infrastructure sector will build on a strong performance in 2008, further driven by the Chancellors recent GBP3bn stimulus package.

The public sector will also benefit from a continued increased spend in education and health and the fast-tracking of major projects.

However, we anticipate that in the new climate, the burden of the stimulus package and the Olympic spend is going to have to be met by reduced spending in future years in these two sectors.

With the market sectors moving at different speeds, contractors and building materials manufacturers are going to have shift their marketing emphasis.

The toll of the stalling commercial and industrial markets and the impact of the credit crunch on property development, especially housing, will be more keenly felt on building materials where sales are skewed towards these sectors in 2009.

These materials include bricks, blocks and roof tiles and we forecast, for example, block sales to be down by almost 28% in 2009 from 2008's already gloomy figures.

For more details of our Construction Forecast for 2008 - 2012, visit the Leading Edge website.