UK construction sector boosts GDP hopes as output bounces back - although it misses expectations

Jessica Morris
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Construction bounced back in March (Source: Getty)

Britain's construction industry rebounded in March bringing an end to four months of decline, boosting hopes that the disappointing first quarter gross domestic product figure will be revised upwards.

Total construction output rose 3.9 per cent month-on-month, following a 0.3 per cent fall in February. However, this was slightly below analyst estimates for an increase of four per cent.

Annual construction output fell by 1.1 per cent, slightly less than the 1.6 per cent fall forecast in preliminary estimate of first quarter gross domestic product.

But despite the good news, the ONS said that the upward revision to construction output wouldn't be enough to impact the awful first quarter GDP figure reported last month - although economists have suggested that combined with better-than-expected manufacturing data released earlier this week, things could start to look up.

"There now looks to be a very good chance that gross domestic product growth in the first quarter will be revised up to 0.4 per cent quarter-on-quarter from 0.3 per cent quarter-on-quarter ... although much will obviously depend on any revisions to growth in the dominant services sector, which is currently put at 0.5 per cent quarter-on-quarter," Howard Archer, chief economist at IHS, said.

The bad news was that new work in the construction sector fell 1.7 per cent - although the bulk of the drop took place in January.

"Looking closely at the three months that make up [the first] quarter ... most of this fall can be attributed to the large fall in January," the ONS said.

"Total housing, public other new work and private commercial work reported falls of 3.4 per cent, 6.6 per cent and 3.0 per cent respectively on the quarter."

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