Construction will continue to grow in 2016 despite 'intensifying' risks within the industry, according to new research.

The Construction Products Association's (CPA) latest forecast estimates a 3.6% growth for this year and a 4.1% rise in 2017.

Private housing starts will rise 5% in both 2016/17, while industrial activity is expected to rise 21.3% by 2019.

Office construction work is forecasted to increase 7% in the next two years, while infrastructure work will rise 56.9% by 2019, largely due to the inclusion of HS2.

While future predictions remain positive, a number of factors are threatening growth including weakening global economic surge, the EU referendum and skills shortages.

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Professor Noble Francis, Economics Director, said: "The key fundamentals for the sector are generally positive and construction growth is set to be more balanced. Private housing work, especially in London and the South East, provided the majority of growth between 2012 and 2015. During this forecast period, however, all three of the largest construction sectors – private housing, commercial and infrastructure – are expected to drive industry activity.

"There are significant risks to this forecast, however. First is the uncertainty regarding global economic prospects. The chief concern remains weakness in China and the effect it can have on other countries. Second is the EU Referendum, likely due this year. While we make no assumption about the result, we note the uncertainty around the issue is already affecting investment decisions. 

"Third and perhaps of most importance for the industry is the urgent challenge around skills shortages.  The availability and cost of skilled labour has clearly impacted the house building sector; the recovery in other sectors is already showing a similar vulnerability."

(LM)