Construction set for growth worldwide

A resurgence in US construction is set to support a robust run of growth for the sector worldwide, according to the latest report from Oxford Economics.

The report analyses statistics for the sector from across the world, and 2018 is set to be a strong year for construction, with several back-to-back years of robust expansion above average annual growth rates seen over the current decade also predicted.

This optimistic outlook is set to be fuelled by a sharp upturn in US construction activity after the American sector spent much of 2017 in the doldrums.

US construction is expected to have registered growth for last year of just 0.2% following a Q2 contraction by 0.6% and with a further expected decline in Q3 2017.

In contrast, the forecast for 2018 is an expansion US Construction by 2.8%, to be followed by an even stronger 2019 with projected growth of 3.3%.

Expectations for US construction growth are set by strong global economic growth and a further strengthening in world trade, plus higher optimism driving additional investment in new projects.

A further boost for the American sector will come from the Trump Administration’s proposed infrastructure investments.

Residential building is the dominant driver in the US, although infrastructure investment may leave civil engineering as the leader.

Oxford Economics predicts US civil engineering to grow by 2.2% in 2018.

Globally, the expected resurgence in US construction is a key driver of the forecast for global construction growth to accelerate to 3.2% this year and 3.3% in 2019, from an expected 2.4% in 2017, 2.5% in 2016 and an average of the preceding five years of 2.8%.

Robust growth will continue in eurozone construction and forecasts have been upgraded for the year. This continuing buoyancy in construction comes against a backdrop of widespread economic strength in the eurozone.

The German construction sector remains the major driving force, riding a wave of demand in the wake of the million-plus migrant influx from 2015. Both residential and non-residential construction have seen significant boosts.

For China, the 2018 forecast has been scaled back, although construction growth is still strong at 4.2%. Overall, construction in China remains relatively steady, with non-residential construction the strongest component, especially commercial structures such as office buildings and shopping complexes.

In the UK, however, ongoing weakness is predicted for construction in 2018, with a contraction of 0.3% forecast for the sector. The sectoral picture is bleaker than in recent years as the outcome of uncertain Brexit negotiations impacts on investment decisions.

The full research report is available from Oxford Economics.

 

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