Decline in UK construction sector ends with 0.9% growth in Q4

Construction in London

A long decline in the UK’s construction sector was halted in the fourth quarter of 2012, the Office for National Statistics (ONS) revealed today.

Construction output grew by an estimated 0.9% in the final quarter of the year, compared with the third quarter. This ends a run of quarterly decreases that started in the third quarter of 2011 and has resulted in the industry shrinking by 11% according to a report in the Financial Times.

Output in the fourth quarter grew by more than initially estimated by the ONS. In its preliminary estimate of fourth quarter 2012 GDP, the statistics agency had assumed an expansion in construction output of just 0.3%.

However, the revision to the estimate will not have a significant impact on later estimates of GDP for the fourth quarter, which is believed to have shrunk by 0.3% compared to the prior quarter.

The biggest contribution to the increase in construction output in the fourth quarter came from private housing (5.9%) and infrastructure (4.2%) although this growth was partially offset by falls in public non-housing and private housing repair and maintenance (4.9% and 4.8% respectively).

The estimated volume of all new work grew by 1.6%, while repair and maintenance work declined by 0.3% compared with the previous quarter.

Despite the quarterly improvement, construction output in the fourth quarter of 2012 fell by 9.3% compared with the same quarter in 2011, continuing the trend of year-on-year falls that began in the third quarter of 2011. The ONS noted that there were decreases in seven of the nine published sectors, with growth recorded only in two relatively small sectors – private industrial and public housing repair and maintenance.

The year-on-year comparison also shows that the estimated volume of all new work fell by 11.6% and repair and maintenance work was down 4.7%.

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