Growth in UK construction output

By Helen Wright14 November 2013

Construction output in the UK in September increased 5.8% year-on-year.

Steady growth has also been recorded in the last two quarters, according to the latest data from the UK Office for National Statistics (ONS).

However, construction output fell 0.9% in September when compared with August this year. All sectors, excluding public new work and private commercial other new work, were estimated to have fallen month-on-month.

Nevertheless, the ONS said construction output had shown steady growth in the last two quarters, rising 1.7% in the third quarter 2013 and 1.9% in the second quarter.

This growth has come after a prolonged period of predominantly negative growth which began in the third quarter of 2011.

The ONS added that the 1.7% growth in the third quarter was the highest Q3 growth recorded since 2003.

But it said there were conflicting stories in the sub-sectors in the third quarter of 2013, with new work showing strong quarterly growth of 3.1% – the highest quarterly growth since Q2 2010 – but a fall in repair and maintenance of 0.6%.

When comparing Q3 2013 with Q3 2012, construction output increased 4.1%. The ONS said this was predominantly due to a 6.2% increase in new work.

Within the new work category, private new housing increased 15.6% and private commercial other new work 12.5%, while infrastructure fell 3.7%.

These three sectors accounted for approximately 75% of all new work in the third quarter, with a combined volume of £13.1 billion (€15.6 billion) of the estimated £17,400 (€20.8 billion) new work output over the period.

Construction Products Association results

Meanwhile, the latest data from the Construction Products Association also showed that activity in construction rose for the second consecutive quarter in Q3.

Commenting on the Association’s Construction Trade Survey, Construction Products Association economics director Noble Francis said, “It was encouraging to see that the recovery, which started in the second quarter, has continued into the third quarter.

“A balance of 43% of contractors reported rises in activity, the second highest level since pre-recession 2007. Although private housing is clearly driving industry growth, all construction sectors enjoyed increases in output. With rises in new orders and enquiries, the industry clearly expects that the recovery in output will continue over the next 12 months.

“Construction tender prices in Q3 also increased for the first time in over four years, with 4% of firms, on balance, reporting a rise. However, higher costs, most recently due to increasing labour costs, offset this. As a result, 11% of firms, on balance, reported that profit margins in the industry declined in the third quarter.”

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