Following last month’s budget the picture coming from the construction sector seems to be one of uncertainty. The government claims that it has now changed the planning system to drive local growth and the first payments of the New Homes Bonus which will total £200 million in 2011 have been made to councils. In addition the FirstBuy scheme is promised to help 10,000 first time buyers with £210 million available over 2 years.
In their latest release the Office for National Statistics shows that total construction output in February 2011 was up 8.6% on January 2011 and down by 0.3% on February 2010. All sectors were up, with the strongest growth in Public Housing repair and Private Industrial new build (both from a small base). When December 2010 to February 2011 are compared with the previous 3 months there was a fall of 18.3%.
The Construction Purchasing Managers’ Index also showed an increase in activity across all sectors in March, continuing the trend from January and February.
Announcing a 5% growth in revenue and a 64% growth in trading profit for Wolseley’s half year results Ian Meakins, Chief Executive said “The impact of recent VAT increases and government spending cuts leaves the outlook in the UK more uncertain.”
This week the Construction Products Association published their Spring forecast in which they predict a fall of 0.8% in 2011 and 2% in 2012 as recovery in private sector construction fails to match the sharp downturn in public sector spending. By 2015 they predict that Private Sector construction work will rise to £15 billion but falls of 53% in education and 27% in health will see Public Sector work drop to £11bn. Even with 5 years of modest growth they predict that private housing starts will still be 16% below the 2007 peak.