Category: UK Construction Output

UK Construction Output

UK construction output rebounds in June as homebuilder Bellway reports booming sales

Growth in the UK’s construction sector was flat across the second quarter as an increase in June reversed May’s declines

Construction output has delivered another month, thumping economist forecasts.

In June alone, output in the construction industry rose by 1.2pc compared with May. That saw the ONS update their estimate for second quarter construction growth to flat from the previous three months, up from a 0.5pc drop.

The upward revision will affect the ONS’ first estimate of second quarter GDP, which assumed that construction output would fall. But as construction makes up a small proportion (6.3pc) of GDP, the change should not affect growth estimates to one decimal place.

Total output rose by 5.3pc in June on the same month last year according to the Office for National Statistics (ONS), exceeding analyst growth estimates by 0.6 percentage points.

IHS Global Insight’s Howard Archer now sees the sector “well positioned” for expansion in the third quarter.

The rebound, coupled with healthy survey evidence, “suggest that the sector’s upturn remains firmly intact despite output being only flat overall in the second quarter” said Mr Archer.

The UK’s housing minister, Brandon Lewis, said that today’s figures show that government “efforts to get Britain building have worked”, with new housing construction output at its highest level since 2007.

British homebuilder Bellway today announced that it sold 21.2pc more homes in the year ended 31 July on the previous year.

Bellway chief executive Ted Ayres said that “the group has reacted positively to the continued strength of the UK housing market, significantly increasing output to satisfy customer demand”.

The company also saw average selling prices up by 10.2pc to £213,000 in the same period. Bellway said that house prices were up a result of “ongoing changes in product and geographic mix”.

UK construction output rise 2.2% driven by housebuilding

Rise in construction output likely to add an extra 0.1 percentage points to third quarter GDP, says ONS

UK construction output grew solidly in October, led by the biggest rise in housebuilding in more than two years.

An upward revision to construction output in the three months to September is also likely to add an extra 0.1 percentage points to third quarter gross domestic product growth, the Office for National Statistics said.

Construction output rose 2.2pc on the month in October after a fall of 0.5pc in September. On the year, output is up 5.3pc, slowing from an 8.2pc increase in September, which was the biggest since January 2011.

This marks a big turnaround from 2012, when construction output fell by 7.5pc and was a major drag on overall growth, despite its small share of just over 6pc of the economy.

Separate private-sector surveys had reported the biggest expansion in construction activity in over six years in October and November, and Friday’s official data also suggest the sector will make a strong contribution to overall economic output.

Britain’s economy grew by 0.8pc in the three months to September, the strongest quarterly growth in three years, according to an early estimate, and further revisions will be published on December 20.

The turnaround in construction this year is down to a marked revival in house-building, driven by a government scheme to aid buyers of new homes and a rebound in house prices, which are up nearly 8pc on the year according to mortgage lender Halifax.

This is the biggest rise in over six years, and fears of a possible bubble prompted the Bank of England late last month to announce it would scrap the part of its Funding for Lending Scheme that supports mortgage lending.

But this alone is unlikely to stop further rises in house prices. The government expanded another scheme to help home-buyers with low deposits in October, and in a set of economic forecasts last week it predicted that house prices would rise by a further 5pc next year and by 7pc in 2015.

The ONS said that new housing grew by an annual 18.6pc in October, the biggest rise since January 2011.

However overall construction levels remain well below those seen before the crisis, and what economists think is needed to meet demand.

Just 135,000 homes were built in the year to April 2013, down from the more than 200,000 homes a year that were built in the years running up to the financial crisis, government figures show.

Most other construction sectors have yet to return to solid growth. Infrastructure building is 2.8pc lower than last year, public building works are down by 6.8pc and private industrial work is 26.0pc lower. Private commercial work is growing at an annual rate of 8.7pc, however.

The government’s Office for Budget Responsibility predicts a pick-up in business investment next year, and last week the government also said that insurers were willing to commit £25bn to long-term infrastructure projects.