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UK construction industry output at 13-year low

THE total volume of output in the UK's construction sector fell to its lowest level since 1999 in the third quarter of this year, according to official data.

The Office for National Statistics (ONS) said output was down 11.3% year-on-year and 2.6% from the second quarter as government spending cuts and a struggling housing market continued to take their toll.

Between the second and third quarter there were declines in seven of the nine sectors the ONS measures.

The most significant decrease was the 8.2% fall in the private commercial area, which typically accounts for more than a third of new work in the sector.

On an annual basis private commercial was down 17.4%, which was said to be its lowest level in 16 years. New infrastructure showed the largest quarter on quarter increase with a growth of 9.9%, but it remains below the levels seen at the end of 2011 and was 11.3% down year-on-year.

The construction figures are not expected to trigger a downward revision to estimates that UK gross domestic product (GDP) grew by 1% in the third quarter, as the ONS said it had already factored in a 2.5% quarter-on-quarter decline in construction activity.

Howard Archer, chief UK and European economist at IHS Global Insight, said the sector will be hoping the rebound in GDP will stimulate more building work.

He said: "The third-quarter decline in construction output was a particularly poor performance given that it should have benefited from the making up of some of the activity lost in the second quarter to the extra day public holiday and very wet weather.

"Even if the construction sector can avoid further contraction in the fourth quarter, it looks unrealistic to expect it to materially contribute to growth.

"The sector continues to be hampered by major headwinds, notably including public spending cuts, an extended weak economy, a struggling housing sector, and problems in getting funding for major projects.

"In particular, the government's spending cuts are limiting overall expenditure on public buildings, schools and hospitals."

Contextual targeting label: 
home improvement

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