CPA: construction fundamentals remain positive

UK construction output was marginally weaker in the final three months of 2015, but the Construction Products Association (CPA) believes the key fundamentals remain positive.

On 28 January the UK's Office of National Statistics reported that GDP rose by 0.5 per cent. Within this, construction output was down by 0.1 per cent, its second consecutive quarterly fall following the third quarter’s 1.9 per cent decline.

Commenting on the figures, Professor Noble Francis, Economics Director at the CPA: “Construction output endured a slowdown in the third quarter of 2015 and experienced mixed fortunes during the final quarter. However, the ONS’s -0.1 per cent is broadly flat and needs to be taken within the context that it is the ONS’s preliminary estimate of UK economic activity with only around 40 per cent of the data available. The figure is also likely to be revised when the full set of data is available. Construction experienced a similar situation almost a year ago when it was initially reported that construction had two consecutive quarters of declining output but, subsequently, upward revisions occurred to both quarters.

“The key fundamentals in the construction sector are positive. Our latest forecasts anticipate growth in 2016 of 3.8 per cent in construction output based upon growth in house building, commercial offices and infrastructure. There are considerable risks to the forecasts, however, due to skills availability and concerns about the potential impacts of both global economic volatility and the EU referendum on the UK economy and investment in construction.”