Construction drops as grim outlook bites

Tim Wallace
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CONSTRUCTION output across the EU plummeted in January, official figures showed yesterday, with economists warning the sector is unlikely to recover for some time.

Meanwhile the Italian manufacturing sector shrank further, underlining the severity of the recession the country is currently going through.

Compared with January 2011, output was down 1.4 per cent in the Eurozone and one per cent in the EU.

Construction output fell 0.8 per cent in the Eurozone in January compared with December, and 4.1 per cent in the 27 EU nations overall.

The Czech Republic led the monthly fall in the volatile index, with output falling 20.1 per cent after growth in December of 16.7 per cent.

Construction plummeted in the UK, down 13.8 per cent, following a similar fall of 11.2 per cent in December.

Meanwhile Slovenia registered growth of 17.4 per cent, after alternating between sharp rises and falls in the previous three months.

“In Britain, we saw signs of life in the sector in the middle of 2011, but they were squashed by the grim news from the Eurozone,” said Kelly Forrest, an economist with the Construction Products Association.

“Although we expect activity to fall by around five per cent this year, there are signs of optimism in areas like housing construction, particularly in London and the south east.”

Italy’s industrial output slumped 7.4 per cent in the month, pointing to a delayed return to growth.

“The country is undergoing a significant recession, and it could only emerge at the back end of 2012 or even into 2013,” said Daiwa economist Chris Scicluna.