For the whole fourth quarter of 2013, the construction output is estimated to have risen by a slender 0.2% over the previous quarter (seasonally adjusted). The rise took the statisticians by surprise as their previous estimates had it pencilled for a 0.3% fall for the quarter.
During the fourth quarter there was an increase in the volume of construction new work of 0.7% but a decrease in the output of repair & maintenance of 0.5%.
The pattern seen in the quarterly data is repeated in the monthly data for December, with new work showing more robust 3.4% growth while there was a slight fall of 0.2% in the output of repair & maintenance.
For the whole year 2013, construction industry output is estimated to have risen by £1.49bn to £112.6bn, representing a 1.3% increase on 2012’s output.
This £112.6bn total output figure is 3.9% up on the low of 2009 but 12.2% short of the £128.2bn recorded in 2007, the last peak year.
During 2103 the value of new work increased 2.4% (gaining £1.62bn) but the value of new repair & maintenance output dropped back 0.3% (losing £140m).
Despite a slow beginning to 2013 – with heavy winter weather contributing to a 1.0% decline in construction output in the first quarter – output grew steadily throughout the year. It led to three consecutive quarters of growth for the first time since Q3 2010.
The ONS said that there was a marked difference between the public and private sectors during the year: public spending on construction has fallen year on year by 4.0% (£900m) while private spending has increased by £1.86bn or 3.4%.
The 1.3% annual growth in construction output is almost solely down to new house-building work, which has increased by £21.bn (10.4%) year-on-year, with a small growth contribution from non-housing repair & maintenance of 0.7%.
These increases were in contrast to the decrease in other new work of £450m (0.9%) and housing repair & maintenance which fell by £570m (1.3%).
The preliminary estimate of gross domestic product (GDP) published on 28 January 2014 contained a forecast for quarterly construction output of minus 0.3%. The upward revision to 0.2% for the quarter has no significant effect on GDP growth, however, as these days construction only accounts for 6.3% of GDP.
Industry comment
EC Harris head of strategic research & insight Simon Rawlinson said: "0.2% growth in the quarter may not seem much, but with overall output up by 1.3% in the year and quarterly activity up by 4.4%, today’s output release marks a key milestone in the trajectory of industry recovery.
"After the first reading of 4Q 2013 GDP suggested that construction activity had stalled towards the end of the year, today’s full release of construction output data is reassuring in that it shows not only that rapid growth seen during the middle of 2013 has been consolidated, but also that levels of activity across most sectors have been higher than previously reported. Revisions to seasonally adjusted series have added a further £1bn, equivalent to 0.9% on total output.
"Highlights from the latest release include a continuing upward trend in housing and some growth in infrastructure. The commercial sector has lost some momentum, whilst the industrial sector has fallen to a new trough in the current cycle – hardly a good sign for the rebalancing of the economy. The rate of growth in private housing output has slowed, but at 4% is still robust. New build continues to be stronger that repair and maintenance, suggesting that owners are still retaining cash.
"Looking forward, indicators of future activity suggest that growth trajectory should be maintained, although the terrible weather experienced so far during 2014 will inevitably hit output in the short term. However, most of this will be recovered through acceleration during the rest of the year."
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