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Construction industry comes out of recession

The construction industry came out of recession today on the back of a boost in public sector work, according to preliminary Government statistics.

The Office of National Statistics figures show construction output rose in the third quarter of 2009 by 2 per cent compared to Q2 2009, with a quarter on quarter growth in output indicating the end of recession.

While going into recession is technically defined as two negative consecutive quarters of growth, the end of a recession is recorded at the time of the first growth quarter-on-quarter..

But the figures still show the industry’s output of £25 billion last quarter is 9 per cent down on Q3 2008’s figure of £27.3 billion.

Repair and maintenance work totalled £11.4 billion, up 10 per cent on Q2’s £10.3 billion.

But that was off set by a fall in new work of 4 per cent from £14.2 billion to £13.6 billion.

The biggest growth sectors were public sector non-housing repair and maintenance work, up 26 per cent, and public sector new housing which was up 14 per cent.

By contrast the biggest faller was private sector new commercial work, down 11 per cent.

Glenigan economics director Allan Wilen said: “The overall rise in third quarter output will provide some cheer for the battered construction industry.

“While the main source of growth has been in repair and maintenance activity, the figures also indicate that the rise Glenigan has seen in new government project starts since April is feeding through to the industry’s output.

“However, private sector new work has continued to weaken and overall industry output is still 9 per cent down on a year ago.

“Furthermore the current rise in repair and maintenance work may also prove short-lived. In particular public sector repair and maintenance work will come under increased budgetary pressure over the next year.”

Royal Institute of Chartered Surveyors chief economist Simon Rubinsohn added: “The 2 per cent gain in the headline output number in the third quarter masks a significant divergence between new build and repair and maintenance work.

“While output of the former continues to slip, the latter has now increased for two consecutive quarters.”