Forecasters have had a tough gig in recent times. The word “unprecedented” gets banded about a lot, but 16 months into a global pandemic we have, and continue to experience an economic and social environment with no comparison in living memory.
Nevertheless, we all still need to make plans, which means making a stab at what is likely to happen in the future, however high uncertainty might be. Here at AMA Research, part of Barbour ABI, we produce our quarterly Forecast Bulletin that provides 5-year forecasts of the ONS’ Construction Output and its main subsectors, with the aim of providing an affordable and timely view of what the future holds.
In the first wave of the pandemic last year, most of the economy shut down between March and June. With a complete lack of precedent, many major economic forecasters produced extreme predictions predicated on a steep V-shaped GDP profile. Construction industry forecasts of up to -40% in 2020 were produced, with similarly large bounce-backs in 2021.
In comparison our more modest construction forecast produced last April predicted -19% for 2020: closer to the actual we now know of -13%. This was based on more positive expectations of the construction industry getting back to work, balanced with the likelihood of ongoing social distancing and future outbreaks weighing on commercially sensitive construction sectors.
A big lesson from the pandemic is that the things move too quickly for official statistics to keep up. Publishing GDP figures two months in arrears? By then the world has moved on and its old news.
Making decisions based on the most recent information is critical. We turn around our forecasts in the shortest possible time (without skimping on the accuracy). We aim to publish 3 weeks after the ONS publishes its quarterly sub-sector data in mid-February, May, August, and November.
Having confidence in whatever information you’re using to make decisions with is key. We use in-house expertise; we’ve been going for over 30 years and have built up a wealth of knowledge over that time. We’re in it for the long haul. We’re also leveraging Barbour ABI data more than ever before, doing more to understand the strength of the planning pipeline over time. While this is our standardised forecast, we can also produce construction forecasts for any sector or sub-sector on a bespoke basis.
In an ever more uncertain world, forecasts are more important than ever. While any prediction of the future will be incorrect to a degree, being up-front about the criteria you are using to make your forecast is key as well as being clear about the uncertainties and risks outside your central assumptions.