Download Slide 1

construction industry
forecasts 2011-2015
Dr F. Noble Francis
economics director
current & near-term
economic situation
Economic Growth?
the new economic reality
– forecasting the future
• GDP + 0.5%
• Manufacturing - 0.3% 3rd
consecutive fall
• Largest fall in RHDI since
1977
Prices and Rates
the new economic reality
– forecasting the future
• Inflation – above 5% in
September
• Increase in QE*
* Revised in October
• Interest rates to stay low
near term
Key Risks
• Government debt default from
Greece/Portugal
• China economic slowdown affecting global
economy
Looking forward in the
construction industry
construction industry
forecasts 2011-2015
Private Housing
• Government attempting
to boost housing supply
186,000
Starts
(2007)
137,500
Starts
• Housing Strategy?
(2015)
• Key issue still
Affordability
• Don’t believe the hype –
planning and localism
73,000
Starts
(2009)
Public Housing
• Up to 170,000 affordable
homes in four years but...
30,000
Starts
construction industry
forecasts 2011-2015
(2010)
• ...only half social housing
26,500
Starts
• DCLG capital expenditure
£6.4bn in 2010/11 to
£1.8bn in 2013/14
(2011)
19,100
Starts
(2013)
Total Housing
construction industry
forecasts 2011-2015
• Overall, 121,500 this year...
• 663,000 over 5 years
• 267,000 new households p.a.
• 1.3m households in 5 years
Additional
Housing Gap
(2011-15)
671,000
Education inc. PFI
10,000
0
20.3%
9,000
• Capital expenditure:
£7.3bn in 2010/11
£3.3bn in 2013/14
2.5%
- 20
-5.5%
-16.5%
6,000
£ Million
• Focus - finishing BSF
and Academies plus
basic maintenance
7,000
-7.2%
4.0%
8,000
2.1%
- 40
-19.3%
-6.2%
5,000
4,000
- 60
3,000
2,000
- 80
1,000
0
- 100
2007
2008
2009
2010
2011 (e) 2012 (f) 2013 (f) 2014 (p) 2015 (p)
Health inc. PFI
6,000
• Capital Expenditure:
£4.5bn in 2010/11
£4.4bn in 2013/14
0
47.4%
5,000
- 20
6.3%
-14.8%
4,000
- 40
£ Million
However:
• Focus - essential
repairs
• Shift towards I.T.
spending
-0.9%
-29.7%
3,000
2.0%
-15.2%
- 60
-6.6%
2,000
-2.0%
- 80
1,000
0
- 100
2007
2008
2009
2010
2011 (e) 2012 (f) 2013 (f) 2014 (p) 2015 (p)
Offices
14,000
• Output fell 48%
between (2008-10)
12,000
-3.7%
- 20
10,000
20.4%
5.0%
8.0%
8,000
-36.3%
6,000
• Surfeit office space
outside GL
- 40
14.0%
£ Million
• Demand high profile
space and refit in GL
0
5.0%
-15.5%
-2.0%
- 60
4,000
- 80
2,000
0
- 100
2007
2008
2009
2010
2011 (e) 2012 (f) 2013 (f) 2014 (p) 2015 (p)
Retail
8,000
0
• 2008-09 – 26% fall
7,000
• Negative LT Trend
from internet sales
5.0%
5.5%
6,000
4.7%
0.6%
5,000
3.0%
3.0%
- 20
5.0%
-23.0%
- 40
£ Million
• Expansion plans by
major
supermarkets and
international
investment
-3.3%
4,000
- 60
3,000
2,000
- 80
1,000
0
- 100
2007
2008
2009
2010
2011 (e) 2012 (f) 2013 (f) 2014 (p) 2015 (p)
Industrial Factories
3,500
0
• 2007-09 – 40% fall
3,000
- 20
• Growth due to
manufacturing and
exports
2,500
-1.3%
-14.1%
4.5%
13.0%
2,000
£ Million
3.5%
• Not driving
growth as much as
Government
anticipated
6.0%
5.5%
- 40
-10.0%
-29.1%
1,500
- 60
1,000
- 80
500
0
- 100
2007
2008
2009
2010
2011 (e) 2012 (f) 2013 (f) 2014 (p) 2015 (p)
Industrial Warehouses
3,000
• 2008-09 – 56% fall in
output
0
2,500
- 20
-1.3%
2,000
6.5%
4.5%
7.0%
-34.2%
£ Million
Recovery from low
base due to:
• Domestic demand
5.0%
4.0%
19.0%
1,500
-31.9%
• Long term boost trend to internet
shopping
- 40
- 60
1,000
- 80
500
0
- 100
2007
2008
2009
2010
2011 (e) 2012 (f) 2013 (f) 2014 (p) 2015 (p)
Roads
4,000
• Highways Agency
capital investment
to fall 44% by in
by 2013/14
0
22.3%
3,500
-6.0%
3,000
-6.2%
- 20
29.2%
-20.0%
2,500
5.0%
• Only 14 major
schemes to start
before by end of
2014/15
£ Million
11.6%
2,000
4.0%
- 40
-22.0%
- 60
1,500
1,000
- 80
500
0
- 100
2007
2008
2009
2010
2011 (e) 2012 (f) 2013 (f) 2014 (p) 2015 (p)
Rail
5,000
• Network Rail
fixed spend but
post-2014?
10.0%
4,500
- 20
8.5%
20.0%
15.5%
£ Million
3,000
- 40
32.9%
2,500
40.7%
2,000
- 60
7.9%
1,500
• NAO – £1bn
efficiency savings
0.0%
16.5%
4,000
3,500
• Crossrail outside
of this - £14.5bn
to finish in 2018
0
1,000
- 80
500
0
- 100
2007
2008
2009
2010
2011 (e) 2012 (f) 2013 (f) 2014 (p) 2015 (p)
Energy
4,000
0
• Nuclear programme
35.0%
3,500
- 20
• Renewables, wind
farms, offshore
connections
3,000
7.0%
32.0%
2,500
- 40
£ Million
• Near term work decommissioning &
prelims at Hinkley
20.5%
2,000
15.5%
17.5%
1,500
- 60
20.1%
1,000
-0.2%
-4.2%
- 80
500
0
- 100
2007
2008
2009
2010
2011 (e) 2012 (f) 2013 (f) 2014 (p) 2015 (p)
Private Housing RM&I
14,000
• Slow economy and
VAT - contraction in
2011
0
6.5%
12,000
6.0%
1.1%
10,000
-2.6%
- 20
-1.0%
-12.5%
- 40
8,000
£ Million
• 2012 – deferred
consumer spending
but CERT offset
0.5%
6.1%
3.0%
6,000
- 60
• 2013 onwards –
Economy driven
growth
• Green Deal ???
4,000
- 80
2,000
0
- 100
2007
2008
2009
2010
2011 (e) 2012 (f) 2013 (f) 2014 (p) 2015 (p)
Public Housing RM&I
7,000
• Driven by Decent
Homes programme
0
6.8%
3.1%
4.5%
3.5%
6,000
1.0%
-2.7%
-7.0%
- 20
-4.5%
5,000
• £2 billion from CSR
(optimistic!!!)
-5.4%
- 40
£ Million
4,000
• Programme to finish
after this spending
3,000
- 60
2,000
- 80
1,000
0
- 100
2007
2008
2009
2010
2011 (e) 2012 (f) 2013 (f) 2014 (p) 2015 (p)
Summary
140,000
• Contraction in
2011 & 2012
0
120,000
100,000
2.1%
4.7%
8.2%
-2.7%
3.7%
-1.1%
• Flat in 2013
-13.4%
- 20
-3.6%
0.0%
- 40
• Return to growth
only in 2014
£ Million
80,000
60,000
- 60
40,000
- 80
20,000
0
- 100
2007
2008
2009
2010
2011 (e) 2012 (f) 2013 (f) 2014 (p) 2015 (p)
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)
29%
30%
33%
36%
38%
62%
64%
67%
70%
71%
Private
Public inc PFI
Contribution to Growth
4
£120
2
£100
Change 2011-15 (£ billion)
0
£80
Private Housing Public Housing
Public Nonhousing
Commercial
Industrial
Infrastructure
Private R&M
Public R&M
Total
-2
£60
-4
£40
-6
£20
Sector Value in 2010 (£ Billion)
-8
£12.8
£4.3
£13.3
£23.4
£3.8
£12.0
£23.7
£11.2
£104.5
£0
For further information contact:
[email protected]
www.constructionproducts.org.uk