ONS revises data on construction industry

Britain's building industry endured another contraction of output in the first three months of the year – but by less than previously estimated, the Office for National Statistics says.

The ONS reported that activity in the construction sector was 4 per cent lower in the first quarter of this year compared with the last three months of 2010 – when the extreme weather conditions were at their worst. But that is a better result than the 4.7 per cent the ONS had previously pencilled in for its preliminary estimate of first-quarter GDP a fortnight ago.

Analysts said that, even so, they would not revise their estimates of first-quarter growth higher, because industrial production data released earlier in the week had shown a worse result than thought, and the two effects broadly cancelled each other out. The volume of new private housing work in the first quarter of 2011 was 9.1 per cent lower compared with the previous quarter.

Nonetheless the construction sector is still up on the depths of the recession it was suffering this time last year. Overall, activity expanded by 3.6 per cent compared to the first quarter of 2010. Public spending cuts, a fragile property market and businesses' caution about investment are likely to hold it back.

Although accounting for only 6 per cent of GDP, the building trade has been one of the most volatile, difficult to measure and tricky to predict sectors of the economy, and the swings in its fortunes have often made a significant difference to broader readings of GDP. Some commentators have drawn attention to the apparent inaccuracy of the ONS data in this field, but the ONS argues that new survey methods had improved readings and "we have no reason at present to believe the construction series is giving a distorted picture".