UK construction output results beats expectations

Output in the UK construction industry in April 2013 was down 1.1 per cent year-on-year, beating estimates of a 4.1 percentage point fall and the best result in 17 months.

Comparing the three months from February through April 2013 with the same period last year, the volume of output fell by 4.7 per cent.

New work was down 5.8 per cent, with large falls in public other new work and private-commercial other new work, which reported decreases of 17.3 per cent and 8.8 per cent. respectively (other new work excludes the housing and infrastructure sectors but includes construction on factories, warehouses, schools and offices and so on).

Last month, the ONS said that, at 2005 based prices, the seasonally adjusted estimated total volume of construction output in the first quarter of 2013 was at its lowest level since the fourth quarter of 1998. Output was 2.4 percentage points lower than in the previous quarter, and 6.5 per cent down year-on-year. At the time, the ONS said anecdotal evidence suggested bad weather and low demand were behind the poor results.

Commenting on the results, Howard Archer, chief UK and European economist at IHS Global Instight said:

There now looks to be a very decent chance that construction output could expand in the second quarter, and help growth to strengthen and broaden from the first quarter when GDP rose 0.3 per cent quarter-on-quarter. Even if construction output was essentially stable in the second quarter, that would help matters given that the sector was once again a significant drag on growth in the first quarter after holding back the economy appreciably over 2012....

Life is still generally tough for the construction sector; and, construction companies will be fervently hoping that both the economy and the housing market see sustained improvement over the coming months, and that this increasingly stimulates building work.