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Infrastructure growth forecasts are halved

GROWTH FORECASTS for infrastructure work during the next two years have been slashed in half by the National Council of Building Materials Producers.

In its first forecast of 1999, the BMP predicted that infrastructure work would grow by just 0.5% in 1999 and 2% in 2000. In December the relative forecasts were 1% and 4%.

However, the BMP's December assessment of 1998 exaggerated the downturn in infrastructure work. The actual fall was 3%, rather than the expected 4%. This means the BMP believes infrastructure workload during 2000 will be just 1% lower than previously thought.

BMP's tempered optimism for the civils market is a result of a combination of factors. Work in the power sector has dropped following the Government's decision to turn its face against gas-fired power stations, and uncertainty over Heathrow's Terminal Five has hit the airports market. The Government's promise to increase road maintenance is not expected to make an impact until next year.

However, due to a small increase in the growth of commercial construction and a slight reduction in the fall in industrial work, BMP predicts that non-housing new construction will grow by 5% during the next two years, as opposed to December's 4.6% forecast.

Total new work is forecast to rise by 5.5% during 1999/2000, while total construction output, including maintenance, is predicted to increase by 4.5%.

The April forecast also contains BMP's first predictions for 2001. It says there is no expectation of the significant downturn many observers were predicting last autumn. Instead the BMP forecasts a 3% increase in infrastructure output, a 2.5% rise in non-housing new construction and a total output hike of 3.5%.

BMP's relatively gloomy view of the infrastructure market was reinforced by the latest new construction order figures from the Department of the Environment Transport and the Regions.

These recorded a 47% drop in infrastructure orders for the months December 1998 to February 1999 on the three preceding months, and a 9% fall compared with the same in period in 1997/98. Orders in January and February were lower than in any month during 1998.

More bad news arrived from the Construction Industry Council. Its quarterly survey showed a 10% decline in the proportion of engineering firms reporting increased earnings since the previous quarter, the first fall since the survey began 18 months ago.

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