Recently revised data
indicates that total construction output increased by 8% in 2017 compared with
2016, to reach a total value of £163.5bn. In terms of value, new work accounts
for the largest share, with output growth having been particularly strong in
the residential new work segment, which saw growth of 14% in the year. RMI output has also been stronger
in the residential than in the non-residential sector. Overall RMI output
increased by 7% in 2017.
In H1 2018, the construction sector remains
uncertain to moderately optimistic. Indications are that new orders remained
positive into Q4 2017 and this should lead to some growth in terms of output
into 2018 and beyond for certain key sub-sectors, and as a result, the outlook
for the UK construction market remains mildly positive into the medium-term,
although with lower rates of overall growth than previously forecast.
The outlook for the housing sector remains
positive, if modest, with 17% overall growth in residential output currently
forecast between 2017 and 2022. The imbalance between demand and supply for new
housing will remain one of the key drivers for continued output growth for the
residential sector, and the number of new programmes designed to address
shortage in housing stocks should motivate output into the medium-term.
However, predicted growth in the newbuild
sector is set against lower growth levels for completions, and also takes into
account an element of materials inflation – in particular for the finishing of
new housing, such as sanitaryware, tiles and electrical wiring products. RMI in
the residential sector is currently forecast to remain relatively steady, with
low annual growth rates reflecting consumer confidence levels.
The non-residential sector is facing more
subdued growth into the medium-term with output currently forecast to reduce to
1-2% 2018-19, followed by annual growth of around 3% to 2022. The issue of
business confidence and investment levels and the “wait and see” approach
regarding the commitment to future funding and capital commitments are all
likely to act as a brake on output levels into the medium-term.
Infrastructure will remain the largest sub-sector with
growth underpinned by HS2 which has the potential to deliver £3-4bn pa of
output to 2022. However, the HS2 works also bring into question the issue of
capacities both in terms of materials but also workforce which could result in
skills shortages for other sub-sectors into the medium-term.
The
entertainment & leisure sector output is forecast to see good overall
growth to 2022, when output is forecast to be around £10.9bn. Following growth of around 33% in 2017,
annual growth rates are currently forecast to fall back to around 3-5% from
2018 to 2022.
The retail sector is currently forecast to perform less
well, due to a combination of structural changes within the sector and also
potential reduction in consumer confidence and spending levels, and the public
sector is likely to see less investment in capital projects into the
medium-term, particularly given the focus on the collapse of Carillion and
their extensive involvement in PFI contracts.
“Overall growth in
construction output is forecast to reduce to around 2% for 2017-18, but
improving to 3% for 2019-22” said Jane Tarver of AMA Research. “This more modest forecast takes into
account the continuing uncertainty surrounding the Brexit process affecting the
timing of business investment decisions.”
The ‘Construction and Housing Forecast Bulletin - GB 2018-2022’ is published four times a year by AMA
Research. The bulletin provides analysis of the overall construction market in
current prices, in terms of new work and RMI activity, also public and private
sectors and new orders, housing starts and completions, as well as forecasts to
2022. It is sold on a subscription basis and can be ordered online at www.amaresearch.co.uk.
No comments:
Post a Comment