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Construction recovers from May dip

British construction output has recovered from its slight dip in May, according to the Office for National Statistics (ONS)

The statistics agency’s monthly measure of new construction estimated the sector’s building output in June 2014 was 1.2 per cent up on May, reversing a fall of the same amount the previous month, with new housebuilding being a major contributor.

Year-on-year growth in June hit a three-month high at 5.3 per cent - up from 3.9 per cent in May.

However output across the second quarter of 2014 as a whole has remained constant compared to the first quarter of this year, said ONS.

Berenberg economist Rob Wood told Reuters: ‘We expect [the improvement] to continue, particularly as the housing market now seems to be shaking off the effects of tougher mortgage rules, with loan approvals rising 8 percent in June.’

Construction intelligent specialist Barbour ABI economist Michael Dall added: ‘While it’s disappointing that output in the construction industry was flat over the last quarter, mainly due to a poor month in May, it confirms what many people have been expecting - that the rate of growth we’ve become used to over the last twelve months is beginning to plateau.

‘In particular, while housing is continuing to drive the industry’s recovery, growth in the commercial sector has been lower and infrastructure is actually declining over the longer term. Looking ahead, the long-term picture is still optimistic with continued growth in residential expected to sustain the industry.

‘With year-on-year increases in both construction output and contracts awarded, we are confident that the industry is continuing to grow. However, other key sectors will also need to improve if the industry is to surpass its pre-recession size sooner rather than later.’

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