Surging construction sector provides boost to growth

There have been stronger than expected estimates of construction output in the third quarter, which are likely to lead GDP growth for the period to be revised.

shutterstock_123013987According to latest estimates, the construction sector experienced faster than expected growth, the UK output has been revised up in the third quarter.

The current estimates of growth in the period have assumed that construction output increased by just 0.8pc. Large upwards revisions to the data now imply that the GDP growth was 0.1 percentage point stronger.

Assuming there are no other changes, the construction sector’s strength will likely see GDP for the third quarter pushed up from 0.7pc to 0.8pc.

This alteration would mean that the economy had not slowed down as drastically as previously thought, cooling off from 0.9pc growth in the second quarter.

Year-on-year growth of 0.7% was the weakest since May 2013 – before the upturn in fortunes for UK builders, bolstered by Government initiatives such as Help to Buy, which has seen 17 successive months of year-on-year increases.

However, according to the Office for National Statistics (ONS) update also revealed that the sector is off to a weak start in the fourth quarter.

Sector output fell by 2.2pc in October compared with the previous month, with new work and repair 1.7pc lower, while maintenance dropped by a whopping 3.1pc.

Markit chief economist Chris Williamson said:

“The construction sector has grown faster than previously thought so far this year, and especially in the third quarter, adding further to signs of a booming economy.”

Alan Clarke of Scotiabank, said:

“This series is plotting a saw-tooth pattern, up 2pc one month, down 3pc the next, then back up and so on. We are likely to see a bounce next month”, he added, “I don’t believe for one minute that year-on-year construction output growth is near-zero”.



Office for National Statistics

Herald Scotland

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