Construction industry forecasts 2011-2015 Dr F. Noble Francis economics director.
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Transcript of Construction industry forecasts 2011-2015 Dr F. Noble Francis economics director.
construction industryforecasts 2011-2015Dr F. Noble Franciseconomics director
current & near-termeconomic situation
Economic Growth?
• GDP + 0.5%
• Manufacturing - 0.3% 3rd consecutive fall
• Largest fall in RHDI since 1977
the new economic reality– forecasting the future
Prices and Rates
• Interest rates to stay low near term
• Inflation – above 5% in
September
• Increase in QE*
* Revised in October
the new economic reality– forecasting the future
Key Risks
• Government debt default from Greece/Portugal
• China economic slowdown affecting global economy
Looking forward in theconstruction industry
Private Housing
• Government attempting to boost housing supply
• Housing Strategy?
• Key issue still Affordability
• Don’t believe the hype – planning and localism
construction industryforecasts 2011-2015186,00
0Starts
(2007)
73,000Starts
(2009)
137,500
Starts
(2015)
Public Housing
• Up to 170,000 affordable homes in four years but...
• ...only half social housing
• DCLG capital expenditure £6.4bn in 2010/11 to £1.8bn in 2013/14
construction industryforecasts 2011-2015
30,000Starts
(2010)
26,500Starts
(2011)
19,100Starts
(2013)
Total Housing
• Overall, 121,500 this year...
• 663,000 over 5 years
• 267,000 new households p.a.
• 1.3m households in 5 years
construction industryforecasts 2011-2015
Additional Housing
Gap
(2011-15)
671,000
-5.5%
2.5%4.0%
20.3%
-7.2%
-16.5%
-19.3%-6.2%
2.1%
-100
-80
-60
-40
-20
0
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2007 2008 2009 2010 2011 (e) 2012 (f) 2013 (f) 2014 (p) 2015 (p)
£ M
illio
n
Education inc. PFI
• Capital expenditure: £7.3bn in 2010/11 £3.3bn in 2013/14
• Focus - finishing BSF and Academies plus basic maintenance
6.3%
47.4%
-14.8%-0.9%
-29.7%
-15.2%-6.6% -2.0%
2.0%
-100
-80
-60
-40
-20
0
0
1,000
2,000
3,000
4,000
5,000
6,000
2007 2008 2009 2010 2011 (e) 2012 (f) 2013 (f) 2014 (p) 2015 (p)
£ M
illio
n
Health inc. PFI
• Capital Expenditure: £4.5bn in 2010/11 £4.4bn in 2013/14
However:• Focus - essential
repairs• Shift towards I.T.
spending
20.4%
-3.7%
-36.3%
-15.5% -2.0%
5.0%
14.0%
8.0%5.0%
-100
-80
-60
-40
-20
0
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2007 2008 2009 2010 2011 (e) 2012 (f) 2013 (f) 2014 (p) 2015 (p)
£ M
illio
n
Offices
• Output fell 48% between (2008-10)
• Demand high profile space and refit in GL
• Surfeit office space outside GL
4.7%
-3.3%
-23.0%
0.6%3.0%
3.0%5.0%
5.5%
5.0%
-100
-80
-60
-40
-20
0
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2007 2008 2009 2010 2011 (e) 2012 (f) 2013 (f) 2014 (p) 2015 (p)
£ M
illio
n
Retail
• 2008-09 – 26% fall
• Expansion plans by major supermarkets and international investment
• Negative LT Trend from internet sales
-1.3%-14.1%
-29.1%
13.0%
-10.0%
3.5%6.0%
5.5%4.5%
-100
-80
-60
-40
-20
0
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2007 2008 2009 2010 2011 (e) 2012 (f) 2013 (f) 2014 (p) 2015 (p)
£ M
illio
n
Industrial Factories
• 2007-09 – 40% fall
• Growth due to manufacturing and exports
• Not driving growth as much as Government anticipated
-1.3%
-34.2%
-31.9%
19.0%4.0%
7.0%
6.5%5.0%
4.5%
-100
-80
-60
-40
-20
0
0
500
1,000
1,500
2,000
2,500
3,000
2007 2008 2009 2010 2011 (e) 2012 (f) 2013 (f) 2014 (p) 2015 (p)
£ M
illio
n
Industrial Warehouses
• 2008-09 – 56% fall in output
Recovery from low base due to:
• Domestic demand
• Long term boost - trend to internet shopping
-6.2%
11.6%
29.2%
22.3%
-6.0%
-20.0%
-22.0%
5.0%4.0%
-100
-80
-60
-40
-20
0
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2007 2008 2009 2010 2011 (e) 2012 (f) 2013 (f) 2014 (p) 2015 (p)
£ M
illio
n
Roads
• Highways Agency capital investment to fall 44% by in by 2013/14
• Only 14 major schemes to start before by end of 2014/15
8.5%
7.9%
40.7%
32.9%
15.5%
20.0%
16.5%
10.0% 0.0%
-100
-80
-60
-40
-20
0
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2007 2008 2009 2010 2011 (e) 2012 (f) 2013 (f) 2014 (p) 2015 (p)
£ M
illio
n
Rail
• Network Rail fixed spend but post-2014?
• Crossrail outside of this - £14.5bn to finish in 2018
• NAO – £1bn efficiency savings
7.0%
-0.2% -4.2%
20.1%
17.5%
15.5%
20.5%
32.0%
35.0%
-100
-80
-60
-40
-20
0
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2007 2008 2009 2010 2011 (e) 2012 (f) 2013 (f) 2014 (p) 2015 (p)
£ M
illio
n
Energy
• Nuclear programme
• Near term work -decommissioning & prelims at Hinkley
• Renewables, wind farms, offshore connections
-2.6%
1.1%
-12.5%
6.1%
-1.0%
0.5%3.0%
6.0%
6.5%
-100
-80
-60
-40
-20
0
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2007 2008 2009 2010 2011 (e) 2012 (f) 2013 (f) 2014 (p) 2015 (p)
£ M
illio
n
Private Housing RM&I
• Slow economy and VAT - contraction in 2011
• 2012 – deferred consumer spending but CERT offset
• 2013 onwards –Economy driven growth
• Green Deal ???
-5.4%
3.1%
-2.7%
6.8%
-7.0%-4.5%
1.0%3.5%
4.5%
-100
-80
-60
-40
-20
0
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2007 2008 2009 2010 2011 (e) 2012 (f) 2013 (f) 2014 (p) 2015 (p)
£ M
illio
n
Public Housing RM&I
• Driven by Decent Homes programme
• £2 billion from CSR (optimistic!!!)
• Programme to finish after this spending
2.1%-2.7%
-13.4%
8.2%
-1.1%-3.6% 0.0%
3.7%
4.7%
-100
-80
-60
-40
-20
0
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
2007 2008 2009 2010 2011 (e) 2012 (f) 2013 (f) 2014 (p) 2015 (p)
£ M
illio
n
Summary
• Contraction in 2011 & 2012
• Flat in 2013
• Return to growth only in 2014
Risks to Construction
• Pace of economic recovery
• Impact of government policies
•Growth strategy• Localism• Green Deal• Energy
• Availability of finance
• Effect of increasing material/product costs
Construction Output (2010-15)
Private Public inc PFI
38%
62%
36%
64%
33%
67%
30%
70%
29%
71%
Contribution to Growth
£12.8 £4.3 £13.3 £23.4 £3.8 £12.0 £23.7 £11.2 £104.5£0
£20
£40
£60
£80
£100
£120
-8
-6
-4
-2
0
2
4
Private Housing Public Housing Public Non-housing
Commercial Industrial Infrastructure Private R&M Public R&M Total
Cha
nge
2011
-15
(£ b
illio
n)
Sector Value in 2010 (£ Billion)
For further information contact:
www.constructionproducts.org.uk