Construction output suffers a fall despite homebuilding surge

The office for National Statistics said construction output failed to improve despite a homebuilding surge

A housebuilding surge failed to offset a summer blip for the wider building sector as industry output slipped back marginally, official figures showed today.

The Office for National Statistics said construction output, which accounts for 6.3% of the overall economy, edged 0.1% lower during August, although the previous month’s advance was revised up to a 2.8% rise.

August’s reverse came as a 1.6% jump in private sector housebuilding — fuelled by easing mortgage conditions and the Government’s Help to Buy scheme — was offset by lower levels of infrastructure and maintenance work, contradicting stronger survey evidence.

But despite the volatile monthly figures, construction output remains 4% ahead of a year earlier and the sector has chalked up three months in a row of annual growth for the first time in more than two years.

The industry remains nearly 15% below its pre-recession peak but the recent advance is being fuelled by private housebuilding — up 18.1% year on year and growing at the fastest annual pace since June 2011. Construction is likely to bolster buoyant growth figures for the July to September quarter due in a fortnight.

Martin Beck, UK economist with Capital Economics, said: “New construction orders were up 33% year on year in the second quarter. So although a small sector, the strength of the rebound means it may play a major role in the recovery.”