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Forecasts for 2000 downplay slump fears

A SIGNIFICANT strengthening of the construction market in 2000 has been identified by NCE's analysis of the industry's three main forecasts.

However, recession fears seem to have been delayed rather than banished. The first forecasts for 2001 suggest an end to seven consecutive years of growth.

Previous forecasts from the Building Materials Producers, Construction Forecasting and Research and Hewes and Associates predicted an average 1.1% drop in non-housing new construction during 2000. But the same three spring forecasts suggest output will instead grow by 1.2% (see diagram). This equates to extra work worth over £700M.

The greater optimism for 2000 is created by a belief that the commercial construction market will be more robust next year. It was feared that the engine room of the last boom would see output down 2.5% in 2000; it is now expected to increase by 0.8%.

Elsewhere there is little change, with infrastructure output set to grow by 1.2% in 2000, after declining 1.7% this year.

Including housing, total new build construction is expected to grow on average by 1.3% next year. The repair and maintenance market will perform better and is forecast to rise by 2.8%. Total output is predicted to be 2% up.

The increase in total output during 2001 is expected to stay at 1%, roughly the same as this year. However, growth in 2001 is forecast to come entirely from building repair and refurbishment.

Almost all growth in the infrastructure market will come from rail sector. Hewes, the most pessimistic of the forecasters, estimate that rail output will grow by 36% during 1999/2000. However, this massive jump is largely fuelled by the Channel Tunnel Rail Link and, as a result, it expects rail output to grow by just 3.9% in 2001.

Hewes also predicts road-related output will fall by 17.2% during 1999. This would be the largest drop of the decade and show road output falling by 60.5% since 1994. However, Hewes expects the fall to be finally arrested in 2000 and for there to be slight, 1.9%, growth in 2001.

Alastair McLellan

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