Construction falls but beats expectations

The construction industry contracted less than expected in the three months to September, but darker days may be on the horizon.

The Office for National Statistics reported little change in the state of the sector, overall output dropping by just 0.2 per cent from the figure for the same period last year.

The ONS had predicted a sharper fall of 0.6 per cent.

Figures for the previous two quarters were also revised upwards, the second quarter now recording a 2.6 per cent increase in output.

“These figures are a tremendous achievement,” said Simon Rawlinson, Head of Strategic Research and Insight at EC Harris.

“This latest data suggests that UK plc is doing better than we thought,”

The revisions mean the sector would need a very poor fourth quarter to avoid beating expectations for the year.

“The level of output increase last year was an amazing achievement and the fact that we have kept it at pretty much that level is a great contribution to the economy. How far we can keep it going is the question,” Rawlinson said.

He pointed to a shrinkage of 20 per cent of pipeline orders, suggesting the possibility work would drop off in the future.

The ongoing crisis in the Eurozone is affecting business confidence and making firms wary of starting projects.

Insecurity over where job cuts are likely to fall is also causing companies to be cautious.