Output is expected to increase to pre-pandemic levels this year, according to a new forecast from the Construction Products Association (CPA).
It predicts a W-shaped economic recession and recovery, with output expected to rise 14 per cent in 2021. In 2020, there was a 14 per cent contraction in output caused by the sharp fall in the first half of the year when the effect of the lockdown hit the sector.
A sustained recovery is expected from the second quarter of the year as vaccines are rolled out and the services-based economy is able to reopen. The CPA has also forecast that output will rise by a further 5 per cent in 2022.
In October, the CPA forecast output would fall by less than had earlier been feared in 2020 due to the quick reopening of sites after lockdown and stronger-than-expected demand for housing and refurbishment work.
Its analysis found private housing was one of the quickest sectors to recover last year, with pent-up demand largely driving activity. Demand for private housing is expected to moderate in 2021 after policies such as the government’s stamp duty holiday and the first phase of the Help to Buy scheme end on 31 March. However, demand is expected to pick up again in line with economic recovery throughout late 2021 and 2022.
The commercial sector has seen a slower recovery due to store closures and low rent collection in retail and leisure, the CPA said. Uncertainty in the offices sector due to widespread home working has also contributed to this. Recovery this year and into 2022 is expected to be further constrained by the long-term shift to e-commerce in retail.
Public housing is also expected to pick-up over the next two years due to a backlog of recladding work as the government’s building safety progresses.
CPA economics director Professor Noble Francis said that infrastructure has managed to escape the uncertainty that has affected demand in retail and offices. He said: “Projects have been able to effectively enact safe operating procedures given the sector’s large construction sites that have fewer different trades mixing in than most sectors.
“As such, infrastructure has been least affected by COVID-19 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.”
He added that the fortune of retail and office sectors will depend upon the coming months. “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,” he said.
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