Friday 10 February 2017 9:36 am

UK construction output beat expectations in December

UK construction output beat expectations in December, rising 1.8 per cent on the month before, compared with forecasts of one per cent. 

Official figures published this morning showed output was up 0.6 per cent on the year before – and 0.2 per cent on a quarterly basis.

The rise was largely driven by private commercial work, which rose 5.2 per cent, the Office for National Statistics (ONS) said – while infrastructure rose just 0.2 per cent. Public housing rose 7.6 per cent month-on-month, while private housing rose 2.1 per cent. 

New work, which accounts for two-thirds of the sector, increased 2.4 per cent compared with November, and two per cent compared with the year before, while repair and maintenance fell 2.1 per cent on the year. 

However, figures published earlier this month suggested growth in the sector slowed in January. Markit's Purchasing Managers' Index, published last week, dropped to 52.2 in January, from 54.2 in December. Any figure below 50 denotes a contraction.

The figures also showed all three of the industry's sub-sectors recorded slower sales. Although housebuilding remained the strongest category, its expansion was at a five-month low. 

"While the December rise in construction output was encouraging, January survey evidence from the purchasing managers was disappointing," said Howard Archer, chief UK and European economist at IHS Markit. 

"The softer January purchasing managers’ survey fans concern over the outlook for construction sector. The clear possibility that the economy will slow appreciably over the coming months despite its current resilience and a lacklustre housing market are concerns for the construction sector. There are also signs that some clients are reluctant to commit to major projects in an uncertain environment."

Today's news came as figures also published by the ONS showed production in the UK's industrial sector climbed to a six-year high in December, while the trade deficit narrowed in the fourth quarter of last year, driven by a rise in exports to non-EU countries.

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