Winter storms and floods caused slump in construction industry

House building and infrastructure held back by wettest weather since 1766

Economics Editor

Builders were forced to down tools by February’s floods and storms, official statistics showed yesterday.

Total output fell by 2.8 per cent from January as exceptionally bad weather afflicted large areas of the country, according to the Office for National Statistics. Private house building was the worst affected, shrinking by 6.3 per cent on January. Infrastructure was also hit hard, sliding by 3.7 per cent.

However, the construction setback followed a 2.1 per cent increase in output in January and activity remains 2.8 per cent higher than in the same month a year ago. Over the three months to February output was up 0.3 per cent on the preceding quarter and industry surveys suggest that building activity recovered in March.

“Construction output will hopefully have seen a marked rebound in March, given the much better weather and seemingly healthy underlying business,” Howard Archer of IHS Global Insight, said.

The construction sector, which accounts for just over 6 per cent of the economy, has been boosted over the past year by a sharp recovery in house prices and the Government’s mortgage and building subsidies.

The Royal Institution of Chartered Surveyors reported this week that the housing boom, which had previously been concentrated on London and the South-east, is now spreading across the country. Nationwide this month also reported a national rise in average house prices in March of 9.5 per cent on a year earlier.

In 2013 construction helped to lift overall GDP growth to 1.7 per cent, the strongest performance since 2007. But analysts cautioned that the sector was now unlikely to contribute to growth in the first quarter of 2014.

“Even if we get a reasonable bounceback in March, today’s figure should hold back overall growth,” Alan Clarke of Scotiabank said.

The ONS’s preliminary estimate for first-quarter GDP growth will be released on 29 April, with some economists expecting an increase in total output of as much as 1 per cent, up from 0.7 per cent in the final quarter of last year.

Construction output fell by a fifth in the 2008/09 recession. There was a partial recovery in 2010 and 2011 before activity slumped again in 2012.

Output still remains 13 per cent below its peak in the first quarter of 2008.  The winter was the wettest in England and Wales since records began in 1766.

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