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New homes boost national construction growth

The burgeoning housebuilding sector helped fuel a 1.3 per cent growth in the construction industry during 2013

New figures released by the Office for National Statistics (ONS) show a £1.49billion growth in the industry, which now has an estimated annual volume output of £112.6billion.

Despite public spending on construction having fallen by 4 per cent (£900m) in the year, private investment increased by 3.4 per cent (£1.85billion).

This growth is almost solely contained within the new housing sector which has increased 10.4 per cent (£2.1billion) year on year with growth from non-housing repair & maintenance of 0.7 per cent. 

Other new work decreased by 0.9 per cent (£450million) and housing repair & maintenance fell 1.3 per cent (£570m).

The seasonally adjusted estimate of construction output in Q4 2013 is estimated to have risen by 0.2 per cent when compared with Q3 2013.

During the last three months of last year there was an increase in the volume of construction new work of 0.7 per cent.

Simon Rawlinson, head of strategic research and insight at EC Harris said: ‘The 0.2 per cent growth in the quarter may not seem much, but with overall output up by 1.3 per cent in the year and quarterly activity up by 4.4 per cent.

‘Today’s output release marks a key milestone in the trajectory of industry recovery.

‘After the first reading of Q4 2013 GDP suggested that construction activity had stalled towards the end of the year, today’s full release of construction output data is reassuring in that it shows not only that rapid growth seen during the middle of 2013 has been consolidated, but also that levels of activity across most sectors have been higher than previously reported.’ 

The monthly output of construction in December 2013 is estimated to be 2.0 per cent higher than in November 2013.

The preliminary estimate of GDP published last month contained a forecast for quarterly construction output of minus 0.3 per cent.

This estimate has been revised and is now estimated to have grown 0.2 per cent, an upward revision of 0.5 percentage points. This upward revision has no effect on the preliminary estimate of GDP growth to 1 decimal place. Construction currently accounts for 6.3 per cent of GDP.

Rob Wood, chief UK economist at Berenberg, said: “Construction ended 2013 on a strong note, driven mainly by the surging housing market. With confidence in the economic recovery building, interest rates still low and house prices booming, 2014 should be another strong year for builders.

“Though the first quarter may well see sizeable disruption from the weather, output will bounceback in when the weather improves as builders make up for lost time.”

Steve McGuckin, UK managing director of Turner & Townsend, said: “Building is back. 2013 ended with a bang, not a whimper, after what began as mere movement turned into real momentum.”

He added: “Rapid expansion after such a long lean period means some growing pains are inevitable, but with careful cost planning, the business risk associated with growth can be mitigated.

“Construction has always been a barometer of wider economic sentiment, and it’s revealing that headhunters say they’re busy again as the industry’s big players seek to hire the best talent. And where senior level recruitment leads, more junior jobs will follow.

“After such a strong end to 2013, the UK’s construction firms are entering 2014 with a renewed sense of energy and purpose.”

More to follow.

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