Supply chain issues to drive warehouse construction growth

Construction output is expected to rise by 2.5 per cent this year, according to a trade body survey.

It is much-needed good news for the economy, with new warehouses and infrastructure growth the driving forces.

More storage space needed for online business

According to the Construction Product Association’s (CPA) latest forecast, the sector covering warehouses and factories is expected to rise by 15 per cent in 2022 and nearly 10 per cent by 2023.

Part of the reason is the continued growth of online retailing and the need for increased storage space to cope with higher levels of stock.

Infrastructure growth is driven by longer-term projects such as HS2, Hinkley Point C and Thames Tideway and their longer timescales.

However, private housing repairs and maintenance, the third largest construction industry sector, is predicted to struggle.

Long term projects boost growth

Construction Products Association, CPA, Economics Director Noble Francis said: “Activity continues to be boosted by the strength of online retailing as well as manufacturers’ need for increased stocks given the persistence of supply chain issues over the last two years.”

Infrastructure is also predicted to be a growth driver with output expected to rise by 8.3 per cent this year and 3.8 per cent in 2023.

Long-term pipelines of work in regulated sectors such as roads, rail, water and electricity will drive expansion, which is expected to increase by 8.3 per cent this year and 3.8 per cent in 2023.

Slow rise in private housing output

However, a slowdown in private house building and repairs and maintenance is predicted due to the axing of the Government’s help-to-buy scheme in March 2023 affecting mortgage availability.

That sector is expected to be hit by a combination of rising unemployment, planning challenges, the cost of meeting new building regulations, plus an increase in materials and labour. The CPA predicts private housing output to rise by one per cent this year and remain flat in 2023.

“Private housing repairs, maintenance and improvements is the sector most exposed to changes in consumer confidence and real incomes. It is also the sector that is most exposed to materials and products cost inflation, as small contractors are less able to plan and purchase in advance for projects,” added Mr Francis.

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