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Government admits construction stats were too optimistic

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The government has admitted its optimistic growth statistics were wrong as new figures reveal the value of construction projects fell one per cent this year

Last month the Office for National Statistics (ONS) claimed that construction output grew an estimated 9.6 per cent between 2010’s first and second quarter. However that has been revised down to 6.8 per cent.

Now data from industry monitor Glenigan reveals the total value of construction project starting on site from January to October 2010 was down one per cent on last year’s historic low.

Residential project starts was down five per cent and civil engineering project starts were down 18 per cent in the first ten months of the year. Non-residential projects starts managed to buck the trend however and was up six per cent.

James Abraham, Glenigan economist, said: ‘The major supermarket chains continued to drive growth in private sector non-residential construction.

‘The impact of Government spending has already been seen in health and community & amenity construction. However, there is a strong pipeline of community & amenity projects due to start on site.

‘Education project starts increased in the three months to October, but are set to decline following the cancellation of the Building Schools for the Future programme.’

The news comes as the government, following pressure from recession-hit suppliers, has admitted it is backtracking on optimistic construction figures it unveiled late last month. Its official statistics claimed construction activity grew 4 per cent in the third quarter of the year, boosting overall UK GDP.

The ONS revision could knock 0.2 per cent off the government’s 1.2 per cent GDP second quarter estimate.

Simon van der Byl, Mineral Products Association executive director, said: ‘Everyone needs to take great care in interpreting construction related data for 2010 to date.

‘Firstly the figures only reflect a welcome comparative improvement and secondly the 21 [per cent] cut in public investment set out in the Comprehensive Spending Review will mean substantial reductions in construction sectors such as health education and roads and will put huge pressure on local authority spending.

‘These negative pressures are likely to outweigh what will probably be a slow and uneven recovery in housing, commercial and other private sector construction over the next two years.’

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