New construction figures offer hope for GDP

 

The double-dip recession may not be as deep as originally feared after figures today showed a less severe decline in construction sector output than previously estimated.

Construction output between April and June fell by 3.9% quarter-on-quarter, the Office for National Statistics (ONS) said, compared to a previous estimate of a 5.2% decline.

While the decline still shows a struggling construction sector, with new infrastructure projects weighing most heavily on the industry, analysts said the figures could lead to an upward revision in total economic growth for the period.

Gross domestic product (GDP) shrank by 0.7% in the second quarter, the first estimate from the ONS said, but this could be revised up to a decline of 0.5%.

Howard Archer, chief UK and European economist at IHS Global Insight, said: "The good news is that construction output fell less in the second quarter than had been estimated, which boosts the prospects of a significant upward revision to the second quarter GDP data."

Meanwhile, official figures showed a slowdown in the rate of so-called factory-gate inflation, the prices charged by manufacturers, to 1.7% in July from 2% in June.

Within the figures, the ONS said the volume of all new work fell by 4.6% and repair and maintenance fell by 2.7% quarter on quarter.

The largest falls in new work were seen in public housing, infrastructure and other public non-housing, while the decline in maintenance work was steepest in private housing.

The movement of the late May bank holiday to June 2012, the additional bank holiday for the Queen's Diamond Jubilee and the unseasonal weather were likely contributing factors to the decline in the second quarter, the ONS added.

The hope has been that the construction sector will eventually benefit from various government measures aimed at boosting infrastructure and housebuilding.

The latest initiative has seen the government launch a scheme to underwrite risk on large infrastructure projects to allow work to go ahead on schemes that are stalled due to market conditions.

Graham Robinson, construction industry expert at international law firm Pinsent Masons, said investing in construction is the best stimulus for economic growth but Government investment has so far "failed to materialise".

He said: "The International Monetary Fund has also warned that the time is coming for the Treasury to act in order to stimulate growth.

"These figures show that the best way for the Government to do that is to invest in infrastructure and halt the rapid decline in a sector which is so crucial to the success of the wider economy."

The producer prices index did show a rise in input prices - paid by manufacturers for the raw materials used in their products - but analysts said it was unlikely to signal an emerging consumer price inflation threat.

PA

PROMOTED VIDEO
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Sport
Luis Suarez looks towards the crowd during the 2-1 victory over England
sport
Life and Style
Cheesecake frozen yoghurt by Constance and Mathilde Lorenzi
food + drinkThink outside the cool box for this summer’s frozen treats
News
John Barrowman kisses his male “bride” at a mock Gretna Green during the Commonwealth Games opening ceremony
peopleBarrowman's opening ceremony message to Commonwealth countries where he would be sent to prison for being gay
Sport
Sir Bradley Wiggins removes his silver medal after the podium ceremony for the men’s 4,000m team pursuit in Glasgow yesterday
Commonwealth games Disappointment for Sir Bradley in team pursuit final as England are forced to settle for silver
Sport
Alistair Brownlee (right) celebrates with his gold medal after winning the men’s triathlon alongside brother Jonny (left), who got silver
England's Jodie Stimpson won the women’s triathlon in the morning
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Trade Desk Specialist (Linux, Windows, FIX, Finance, Networks)

£60000 per annum: Harrington Starr: Trade Desk Specialist (Linux, Windows, FIX...

Associate CXL Consultant

£40000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: CXL, Triple Po...

Project Manager - ETRM/CTRM

£70000 - £90000 per annum + Job Satisfaction: Harrington Starr: Project Manage...

C#.NET Developer

£300 - £350 per day: Harrington Starr: C#.NET Developer C#, WPF,BLL,MVVM, SOA...

Day In a Page

Backhanders, bribery and abuses of power have soared in China as economy surges

Bribery and abuses of power soar in China

The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

Highland terriers steal the show at opening ceremony

Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
German art world rocked as artists use renowned fat sculpture to distil schnapps

Brewing the fat from artwork angers widow of sculptor

Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

BBC takes viewers back down memory lane

The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

Nicolas Cage shines in low-budget drama Joe

Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

Make your own ice lollies and frozen yoghurt

Think outside the cool box for this summer's tempting frozen treats
Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

Fiesta is UK's most popular car of all-time

Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
10 best reed diffusers

Heaven scent: 10 best reed diffusers

Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
Commonwealth Games 2014: Female boxers set to compete for first time

Female boxers set to compete at Commonwealth Games for first time

There’s no favourites and with no headguards anything could happen
Five things we’ve learned so far about Manchester United under Louis van Gaal

Five things we’ve learned so far about United under Van Gaal

It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little
Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

Screwing your way to the top?

Good for Lana Del Rey for helping kill that myth, says Grace Dent
Will the young Britons fighting in Syria be allowed to return home and resume their lives?

Will Britons fighting in Syria be able to resume their lives?

Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

Beyoncé poses as Rosie the Riveter

The wartime poster girl became the ultimate American symbol of female empowerment
The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

The quest to find the perfect pair of earphones

Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears
US Army's shooting star: Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform

Meet the US Army's shooting star

Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform