Construction output set to rise 14% this year

Industry experts at the CPA are predicting a 14% rise in construction output in 2021 and a 4.9% increase in 2022.
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Industry experts are predicting a 14% rise in construction output in 2021 and a 4.9% increase in 2022.

The Construction Products Association (CPA) has announced that construction will see a ‘W’-shaped economic recession and recovery.

Their assumption takes into account the new lockdown restrictions overwinter 2020/21 before a sustained recovery from 2021 Q2 as vaccines are rolled out and the services-based economy can reopen again.

The CPA say, while some sectors of construction are dependent on consumer and business confidence returning, construction activity has largely been able to bounce back quicker than the overall economy.

“With the government making it clear that the construction and manufacturing sectors should continue to operate despite Covid-19 restrictions, output has been able to rise and recover relatively rapidly.”

The 14.0% rise in 2021 follows an estimated contraction of 14.3% overall in 2020 caused by the sharp fall in the first half of last year.

However, the CPA warned that output is only expected to recover to pre-Covid levels in 2022. There is also the risk that once the furlough and self-employment support schemes end in April, there may be a sharp rise in unemployment that could potentially dampen this recovery.

the CPA’s Economics Director, Noble Francis, said: “The spectre of a ‘No Deal’ Brexit that would have badly affected the UK economy and construction in the short term has been avoided but questions over the long term impact of Covid-19 on the structure of the economy still remain.

This continues to leave questions about the fortunes of certain construction sectors. This is most notable in the commercial sector, where there is still lots of uncertainty about the future of retail and office space. It will be crucial to observe how businesses change their operations as the vaccine is rolled out in the coming months and to what extent there is a ‘return to the office’.

“While the fortunes of some sectors have been tied to Covid restrictions and associated business and consumer confidence in the wider economy, infrastructure has largely escaped such uncertainty. Projects have been able to effectively enact safe operating procedures given the sector’s large construction sites that have fewer different trades mixing than in most sectors. As such, infrastructure has been least-affected by Covid restrictions and output is expected to lift the whole industry over 2021 and 2022. Main works on HS2, Europe’s largest construction project, along with offshore wind and nuclear projects are expected to be the main drivers of activity.”

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