Gloomy figures for building sector

 

Britain's slump back into recession was worse than first thought
after statisticians slashed their estimate for construction output
today.

The gloomy building sector figures from the Office for National Statistics (ONS) will have a negative impact of around 0.1 per cent on GDP in the first quarter, which means last month's 0.2 per cent contraction could become 0.3 per cent.

While revised data from other parts of the economy will have a bearing on the final result, economists said the update shattered hopes that official figures will be revised back in line with other more optimistic surveys.

The ONS said the total volume of construction output fell by 4.8 per cent compared with the previous quarter, down from the 3 per cent decline previously thought. Infrastructure showed the largest decrease at 15.9 per cent.

The extent of the construction slump has surprised the City, while the Bank of England said the contrast with other industry figures was perplexing.

Markit chief economist Chris Williamson said: "If these official data are correct, it paints a very worrying picture of the health of the UK economy, especially in relation to infrastructure investment.

"However, our belief is that surveys give a better guide to the underlying state of the economy and that, although far from enjoying a period of robust and sustainable growth, the country is managing to see some expansion after the weak patch seen late last year."

The volume of all new work in the construction sector fell by 6.9 per cent, while repair and maintenance declined by 0.4 per cent on the previous quarter.

Meanwhile, separate figures showed that firms are passing on a bigger than expected proportion of past increases in their costs to customers.

Factory-gate prices rose by 0.7 per cent month on month in April and have now risen by 2.3 per cent in the first four months of 2012.

However, Samuel Tombs, of Capital Economics, said further increases in output prices were less likely as input prices fell by 1.5 per cent month on month.

He added: "If oil prices hold steady at their current level, then input prices should fall by a similar amount in May too."

Inflation rose unexpectedly to 3.5 per cent in March, fuelling worries that it will take longer than expected to fall back to the Government's 2 per cent target.

The Bank of England held back from more quantitative easing yesterday amid signs that it is worried about the impact such a move would have on inflation.

PA

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

Day In a Page

The long walk west: they fled war in Syria, only to get held up in Hungary – now hundreds of refugees have set off on foot for Austria

They fled war in Syria...

...only to get stuck and sidetracked in Hungary
From The Prisoner to Mad Men, elaborate title sequences are one of the keys to a great TV series

Title sequences: From The Prisoner to Mad Men

Elaborate title sequences are one of the keys to a great TV series. But why does the art form have such a chequered history?
Giorgio Armani Beauty's fabric-inspired foundations: Get back to basics this autumn

Giorgio Armani Beauty's foundations

Sumptuous fabrics meet luscious cosmetics for this elegant look
From stowaways to Operation Stack: Life in a transcontinental lorry cab

Life from the inside of a trucker's cab

From stowaways to Operation Stack, it's a challenging time to be a trucker heading to and from the Continent
Kelis interview: The songwriter and sauce-maker on cooking for Pharrell and crying over potatoes

Kelis interview

The singer and sauce-maker on cooking for Pharrell
Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea