AIA construction forecast predicts 5% growth
The non-residential construction sector in the US is expected to see an increase in activity throughout 2013.
The American Institute of Architects’ semi-annual consensus construction forecast found that high demand for hotels and retail projects have boosted the sector to grow by 5%, up from a projected increase of 4.4% in mid-2012.
Kermit Baker, AIA chief economist, said: “After seeing construction activity seesaw for much of last year, there is a much stronger sense that we have entered a recovery phase and the industry is positioned to see continued economic improvement as we move through year and into 2014.
“The resurgent housing market has led to a ripple effect where there is a need for more retail establishments and office buildings across the country.”
The survey also forecasts a 7.2% in construction spending in 2014.
But Baker warns that the design industry can’t expect a certain future until the US’ federal budget and debt issues are resolved.
“This has caused enough anxiety in the real estate marketplace that has resulted in numerous delays and even cancelations of active construction projects,” he added. “More than one quarter of architecture firms are reporting that this tenuous situation is a tremendous concern to clients and may lead to more delays or project terminations.”
The purpose of the consensus construction forecast panel is to project business conditions in the construction industry over the coming 12 to 18 months.
Construction output fell by 3.9% between the first and second quarters of 2012, new figures show today.
The fall is 9.5% when compared with the same period a year ago.
The volume of all new work fell by 4.6% compared with the first quarter of 2012 - and by 12.8% compared with 2011.
A spokesman for the Office of National Statistics, which released the figures, said the poor weather and the extra bank holiday for the Queen’s Diamond Jubilee were likely to have been contributing factors, as well as moving the late May bank holiday to June.
Steve McGuckin, managing director of Turner & Townsend, said: “All the sunshine and Olympic feelgood factor in the world can’t hide the fact that these are black days for the construction sector.
“Stagnation has moved from the stuff of nightmares to the new norm.
“Despite Sir Mervyn King’s assertion this week that the economy is ‘slowly healing’, construction is still walking wounded. Output in the last quarter tumbled to levels not seen since the depths of the 2009 recession. The big drop in infrastructure output is of particular concern for the economy as a whole.”
Optimists who hoped 2013 would see an upturn in work were being forced into a drastic rethink, he added, and small and medium-sized firms were the worst hit.
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European construction output in May was 6.7% down on previous year and only slightly better than April’s low figures.
Compared with May 2011, production in May 2012 dropped by 8.4% in the Eurozone and by 6.9% across all 27 countries of the EU.
Production in construction rose by 0.1% in Eurozone in May compared with April and by 1.6% across the whole of the EU. But the rise is on figures that had decreased by 3.7% and 6.9% respectively in April. Performance in the UK was up 6.3% on April.
The estimates were released by Eurostat, the statistical office of the European Union.
Among the member states with available for May 2012, production in construction rose in eight, fell in six and remained stable in the Czech Republic. The highest increases were registered in the United Kingdom (+6.3%), Romania (+5.0%) and Portugal (+3.6%), and the largest decreases in Slovenia (-17.5%), Hungary (-4.1%) and Spain (-3.3%).
Building construction dropped by 0.2% in the Euro area, but increased by 1.8% in the EU27, after -3.6% and -7.7% respectively in April 2012. Civil engineering rose by 0.6% in the Eurozone area and by 0.7% across the EU, after -3.9% and -4.8% respectively in the previous month.
In terms of the annual comparison, production in construction fell in 12 and rose in three. The largest decreases were registered in Spain (-24.8%), Slovenia (-23.7%) and Portugal (-16.4%), and the increases in Romania (+21.1%), Poland (+6.5%) and Germany (+2.2%). Building construction declined by 8.6% in the Euro area and by 6.3% across all 27 countries, after -5.9% and -5.1% respectively in April 2012. Civil engineering decreased by 9.3% in the Eurozone and by 10.9% across the EU, after -9.3% and -10.9% respectively in the previous month.
Source: The Construction Index
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A new report has warned that architects’ fees are unlikely to return to pre-recession levels over the next four years.
Business market research specialist MCI said that fees will slowly recover between now and 2016 but said it was unlikely they would get back to levels last seen in 2007.
It said that fees slipped 8% in 2008 before crashing 23% a year later when the recession began to bite.
It added: “Prior to the initial recession of 2008 the value of fees increased and growth was driven by a buoyant construction market with the need to increase housing supply resulting in strong output growth in the private and public housing sector.”
The report predicted only a modest recovery for private housing and said any upturn in private building would be slow and gradual with fears about the Eurozone hampering an upsurge in the commercial sector.
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Britain's economy slid into its second recession since the financial crisis after official data unexpectedly showed a fall in output in the first three months of 2012, piling pressure on Prime Minister David Cameron's embattled coalition government.
Chancellor of the Exchequer George Osborne holds Disraeli's original budget box as he leaves 11 Downing Street for Parliament.
The Office for National Statistics said Britain's gross domestic product fell 0.2 percent in the first quarter of 2012 after contracting by 0.3 percent at the end of 2011, confounding forecasts for 0.1 percent growth.
Most economists had expected Britain's $2.4 trillion economy to eke out modest growth in the early 2012, but these forecasts were upset by the biggest fall in construction output in three years coupled with anaemic service sector growth and a fall in industrial output.
Wednesday's figures will be a deep blow for Britain's Conservative / Liberal Democrat coalition, which has slid in opinion polls since a poorly received annual budget statement in March and risks embarrassment at local elections on May 3.
The government is also under pressure over revelations about its close relationship with media tycoon Rupert Murdoch.
The government desperately needs growth to achieve its overriding goal of eliminating Britain's large budget deficit over the next five years.
Britain's economy contracted by 7.1 percent during its 2008-2009 recession and recovery since has been slow, with headwinds from the euro zone debt crisis, government spending cuts, high inflation and a damaged banking sector.
Wednesday's data showed that output was still 4.3 percent below its peak in the first quarter of 2008, and the economy has only grown by 0.4 percent since the government came to power in the second quarter of 2010.
Output in Britain's service sector - which makes up more than three quarters of GDP - rose by just 0.1 percent in the first quarter after falling 0.1 percent in Q4 2011, kept down by a fall in output in the large business services and finance sector.
Industrial output was 0.4 percent lower, while construction - which accounts for less than 8 percent of GDP - contracted by 3.0 percent, the biggest fall since Q1 2009.
Britain's Office for Budget Responsibility forecasts growth of 0.8 percent this year.
Wednesday's data shows that first quarter output was no higher than a year earlier.
The Bank of England has warned that there is a risk of another contraction in the second quarter of 2012, due to an extra public holiday.
But unlike during the previous two quarters, it does not appear keen to provide further monetary stimulus through quantitative easing asset purchases, due to above-target inflation which looks stickier than before.
The BoE, and a number of private-sector economists, had argued before Wednesday that the underlying health of Britain's economy was stronger than ONS data suggested, due to relatively upbeat private-sector surveys and a fall in unemployment.
The ONS's preliminary estimates of GDP are the first released in the European Union, and are based partly on estimated data.
On average, they are revised by 0.1 percentage points up or down by the time a second revision is published two months later, but bigger moves are not uncommon.
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31 redundancies in Leeds and Manchester
Careyojnes Chapmantolcher’s two northern offices have gone into administration, resulting in 31 redundancies.
The London-based practice’s offices in Leeds and Manchester – collectively known as Studio North – will close as a result of a “greatly reduced workload”.
Joint administrator Mike Kienlen of Armstrong Watson said: “Careyjones Chapmantolcher is one of the best known architectural practices in the UK and has a national reputation for high-quality award-winning schemes.
“Eighteen months ago, the business adopted a new structure, dividing its operations into north and south. Unfortunately, the northern company has suffered particularly badly from the poor financial conditions in the property market which have delayed the start of many of its projects.
“Rather than waiting for cash-flow problems to escalate, the management has taken decisive action in order to protect as many of its creditors as possible.”
Tim Tolcher of Careyjones Chapmantolcher added: “The London-based group company will be maintaining and developing its national presence and continuing to provide a high level of service to all of our clients.”
Last April the practice submitted plans for student housing in Salford.
The George Osborne has delivered his to the , which includes the Government’s Growth Review Phase II and the National Infrastructure Plan.
The statement confirmed the plan to unlock up to £20 billion of private investment through signing a Memorandum of Understanding with two groups of UK pension funds, an additional £5 billion of infrastructure spending in this Spending Review period, and commitments to £5 billion of capital projects in the next Spending Review period. In addition, the Government is supporting around a further £1 billion of investment by Network Rail.
To make the UK’s infrastructure fit for the 21st century, the Government has published its National Infrastructure Plan 2011. The plan sets out a critical analysis of the state of the UK’s infrastructure and sets out a pipeline of over 500 infrastructure projects.
The key measures in the National Infrastructure Plan include:
- introducing a new approach to financing infrastructure, by leveraging £20 billion of private investment from pension funds;
- giving local authorities more flexibility to support major infrastructure by considering local borrowing to fund the Northern Line extension to Battersea, and exploring new sources of revenue, such as options for tolling on the A14.
- investing over £1 billion to tackle areas of congestion and improve the national road network, including £270 million for two new managed motorway schemes at congested times on the M3 and M6.
- investing more than £1.4 billion in railway infrastructure and commuter links, including £270 million for a rail link between Oxford and Bedford and £390 million on enhancement and renewal works to improve stations and infrastructure.
- investing £100 million to create up to ten ‘super-connected cities’ across the UK, with 80-100 megabits per second broadband and city-wide high-speed mobile coverage.
The Chief Secretary to the Treasury, Danny Alexander, will chair a new cabinet committee on infrastructure, to push through the delivery of the top 40 priority projects and programmes that are critical for growth.
The second phase of the Government’s Growth Review includes the following 'reforms':
- creating a £20 billion National Loan Guarantee Scheme, to lower the cost of loans to small businesses, and a £1 billion Business Finance Partnership, which will lend to mid-sized businesses and small and medium sized businesses in the UK through non-bank channels.
- increasing the Regional Growth Fund by £1 billion to provide ongoing support to grow the private sector in areas currently dependent on the public sector.
- an extra £600 million to fund 100 additional Free Schools, and an additional £600 million to deliver an additional 40,000 school places.
- introducing a new build mortgage indemnity scheme which will help up to 100,000 families to buy their own home, and launching a new £400 million Get Britain Building investment fund to progress stalled developments.
- providing £45 million of support to UK firms wishing to export, doubling from 25,000 to 50,000 the number of SMEs supported, and making similar support available to 500 mid-sized businesses.
- making 100 per cent capital allowances available in six Enterprise Zones (Black Country, Humber, Liverpool, North Eastern, Sheffield, and Tees Valley).
- making available around £250 million from 2013 to support energy intensive industries manage the costs of electricity, including increasing the relief from the climate change levy on electricity for Climate Change Agreement participants to 90 per cent.
- an additional £200 million for science capital investment.
- investing £55m into the Strategic Rail Freight Network to help deliver schemes that remove bottlenecks and improve capability and longer term connectivity to the UK’s major ports.
- giving a bigger role to businesses in purchasing vocational training programmes. In the New Year employers will be invited to bid for a share of a new £250 million government fund. This will route public investment directly to employers.
- taking decisive action to remove barriers to hiring by making reforms to streamline employment law.
- investing £10 million over five years from 2013-14 in Project Enthuse, matched by investment from the Wellcome Trust, to improve the quality of science teaching in schools
- announcing how the Government will maximise the value of public sector data.
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Latest figures from Office of National Statistics see output down 0.2%.
The construction industry is continuing to feel the squeeze after posting disappointing figures for Q3 output, according to the latest report from the Office of National Statistics (ONS).
Total volume of construction output was 0.2% lower than Q2, with all new work falling by 0.6% in Q3 compared to a 1.1% rise in the previous quarter.
The total volume of construction output in Q3 fell by 1% year-on-year with new work falling by 1.8% and maintenance rising by 0.9%.
Housing suffered the most dramatic falls, with new public housing dropping 8.2% compared to Q2 and a year-on-year fall of 8.9%.
The volume of new private housing work in the third quarter of 2011 fell by 2.5% compared to the previous quarter but was still 0.7% year-on-year.
New infrastructure output was 0.3% lower compared than the previous quarter but still 13.4% higher year-on-year.
Andrew Duncan, managing director of property at Turner & Townsend, said: “These figures are further evidence of the strength of the bad economic headwinds buffeting the construction sector.
“As the Eurozone debt crisis goes from bad to worse, a tidal wave of uncertainty is washing across the Channel, swamping any green shoots that may have sprouted in the second quarter.
“The omens for next year are not good, as the Eurozone saga shows little sign of abating, and the doubt it is sowing risks undermining the fragile progress made by the industry in 2011.”
BDP has announced plans to make up to 100 staff redundant after delays to one of the practice’s major contracts.
The job losses are also set against the backdrop of public sector spending cuts.
Staff are undergoing a number of separate redundancy consultations, which could see as many as 15% of the 900 employees leave.
The move follows a delay to BDP’s £420 million redevelopment of the Royal Sussex County Hospital in Brighton.
Brighton & Sussex University Hospitals (BSUH) NHS trust confirmed the design process was being “paused” at least until the approval of the scheme’s planning application, submitted to Brighton & Hove Council last month.
BDP, which celebrated its 50th anniversary this year, said the consultancy process affected 10-15% of its staff - up to 100 - in its offices in Winchester and Sheffield and its London head office. In a statement it said the “streamlining” followed “the suspension of a major healthcare project and large-scale cuts in public sector work”.
A spokeswoman was unable to say when staff would learn their fate as a series of consultations was under way.
It has been a difficult year for the practice which has had to deal with the death in Bristol of staff member Jo Yeates, and a £3m legal action from the education department over the Westminster Academy.
Peter Drummond, BDP chief executive, said the architect had been “buffered” by its overseas work, including project wins in Kerala, India, and Suzhou, China.
The news comes as architect Archial confirmed it was considering laying off 20 staff in its Glasgow and Edinburgh offices.