Construction growth sluggish, new figures show

Fears that the British economy shrank in the final quarter of last year were fuelled today by sluggish construction growth figures for November.

Construction output increased by just 0.2% in November compared to the previous month and fell by 1.2% in the three months to November compared to the year before, according to figures from the Office of National Statistics (ONS).

The flatline figures for construction in November follow data suggesting industrial production also contracted 1.2% in the final quarter of 2011, with economists expressing "increasing concern" that the total economy shrank in that period.

Howard Archer, chief UK and European economist at IHS Global Insight, said: "It must be stressed that the data are not seasonally adjusted and it must also be borne in mind that construction output only accounts for 7.6% of GDP.

"Nevertheless, the November output data clearly raise fears that the construction sector contracted in the fourth quarter of 2011 and contributed to an overall decline in GDP."

Between September and November 2011, new construction work fell by 1.3%, while repair and maintenance went down by 1%.

New public non-housing work suffered the biggest drop with 14.9% less activity in the period compared with the year before.

But there was some cheer, as activity increased 14.7% in new infrastructure work, 2.8% in new private commercial work and 4% non-housing repairs and maintenance.

The strong new infrastructure figures are likely to continue into 2012 as constructors seek to benefit from Government measures to boost big building projects outlined in Chancellor George Osborne's Autumn Statement last November.

The coalition is also trying to boost house-building by telling Government departments to free up state-owned land for building under a "build now, pay later" programme and with a £400 million "Get Britain Building" investment fund.

PA