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Economy lifted by 4.9 per cent construction rise

Construction output rocketed 4.9 per cent between the third quarters of 2012 and 2013, according to the new figures from the Office for National Statistics (ONS)

The AJ’s sister title Construction News reported that the ONS’s preliminary estimate of GDP also showed output in the industry also rose 2.5 per cent between the second and third quarters of this year.

The year-on-year rise was especially pronounced because construction output was low in the third quarter of last year; output is still 12.5 per cent lower than it was five years ago.

Construction made the second biggest contribution, behind the service sector, to the rise in overall economic output.

Overall the economy grew 0.8 per cent between the second and third quarters of this year and construction provided 0.15 per cent of this increase.

The ONS said new private housing and commercial work contributed to the rise and that private housing repairs also increased. Figures obtained by the AJ this week showed a steady rise in the value of private housing projects starting on site (see graph below) coupled with a 7 per cent increase in private residential planning approvals in the three months to August.

housebuilding graph

Construction Products Association economics director Noble Francis said the industry appeared to be recovering from the downturn but output was below pre-recession levels.

He said: ‘The GDP figures released today show that construction was a key contributor to UK economic growth in Q3 for a second consecutive quarter. This adds to increasing optimism that the industry is recovering from its worst recession in 35 years.

‘The construction sector rose 2.5 per cent in Q3 primarily due to private housebuilding, boosted by Help to Buy, and infrastructure, driven by work on Crossrail, which is Europe’s largest construction project.

‘Although output in the sector still remains 12.5 per cent lower than it was five years ago, today’s GDP figures point towards recovery for the construction sector and the wider economy.”

Markit chief economist Chris Williamson hailed a “sustainable-looking recovery” and said the preliminary GDP figure could be revised upwards from 0.8 per cent to 1 per cent once data for September was finalised.

‘Britain is booming again with the economy showing the most sustainable and robust-looking upturn since the financial crisis,’ he said.

‘The UK economy grew at a robust pace in the third quarter, expanding at the fastest rate since the second quarter of 2010.

‘All four sectors – manufacturing, services, agriculture and construction – grew for a second consecutive quarter, in what’s developing into a broad-based, sustainable-looking recovery.

‘Forward-looking indicators suggest we will see further robust growth in the fourth quarter.

‘While the third quarter GDP reading was the strongest for just over three years, we suspect growth to be revised higher in coming months.

‘In particular, the GDP estimate does not include hard data for September, which the business surveys suggest was a strong month of growth. An upward revision to 1 per cent or more should not be ruled out.’

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