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UK economic growth boosted by construction output and orders

20th December 2013

UK economic growth boosted by construction output and orders

According to the Office for National Statistics, construction output in October rose by 2.2% compared with September and by 5.3% compared with a year earlier.

Buoyant construction new orders for Q3 should ensure further industry growth into 2014.

Dr Noble Francis, Economics Director at the Construction Products Association said:  “The latest output figures highlight that the recovery in construction since the weather-affected Q1 continues unabated.

Growth of 2.2% in October adds to the upward revisions in output during the first three quarters and overall this will boost UK economic activity by an additional £1.5 billion.”

Private housing has been the key driver of recent output growth according to Dr Francis. With the demand in the housing market boosted by Help to Buy this has caused the output in the sector rising 6.2% in October compared with September and 16.9% compared with a year earlier.

Dr Francis said: “Looking forward, the ONS also reported that new orders for construction in Q3 were broadly flat compared with Q2 but considerably higher than one year earlier, with double-digit annual growth in the private housing and commercial sectors, suggesting that the recent growth should also continue into 2014.”

New orders for residential construction was up by 41%, which is now accounting for almost a fifth of all construction output – and it has more than mitigated the falling levels of infrastructure output.

Steve McGuckin, UK managing director of the global construction and project management consultancy, Turner & Townsend, said: “The role of housing in the industry’s recovery has gone from helpful to heroic. The growth in housebuilding has been consistently strong this year, and now the pipeline of new orders is getting even stronger.

“After so many years of weak demand and reduced supply, the market is now suffering growing pains. Supply of building materials in the fastest-growing regions is struggling to keep up with demand.

“This is driving up input prices, and many in the industry are predicting further price rises of 3% to 8% next year. The industry’s capability will continue to expand, but inflationary pressures could erode profit margins.”



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