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Housing fuels construction output growth

Construction output grew by more than 2 per cent in the month to November 2013, according to the latest figures from the Office for National Statistics.

The figures show output for the month to be worth £9.4bn – 2.2 per cent up on November 2012, fuelled largely by strong jumps in housing output.

The year-on-year comparisons reveal strong growth in the housing sectors, with public and private housing up by 20 per cent and 14 per cent respectively.

The commercial sector, widely tipped as being one of the brighter areas this year, grew by 6.4 per cent over the year in November 2013.

However, there were dips in infrastructure and public non-housing work, of 6.3 per cent and 4.9 per cent respectively, while private industrial output dropped by 21.9 per cent, though growth was flat month on month.

Overall, new work in the year to November 2013 was up 3.2 per cent, while repair and maintenance work nudged up slightly by 0.6 per cent.

Over the three months to November, this growth increased to 5.3 per cent compared with the three months to November 2012, with public and private housing once again showing the strongest performance but commercial registering double-digit growth (11.5 per cent).

ONS statistician Kate Davies pointed out that despite the monthly decline of 4 per cent compared with October 2013, the underlying series of figures showed that the industry was on an upward trend, with year-on-year growth recorded in each of the past six months.

“If you look at when each sector was at its lowest ever point, the numbers are substantially away from that,” she said. “These latest figures are certainly not like we have fallen off a cliff and that it’s not recoverable.”

Noble Francis, economics director at the Construction Products Association, which releases its latest forecast update on Monday, pointed out that in Q3 2013, output was still 13 per cent lower than its pre-recession peak in Q1 2008, but the latest data was “broadly what we expected”.

“An increase is never a straight diagonal line going up and a decrease is never a straight diagonal line going down,” he said. “This is just a slight blip in a general upward trend.”

There was little revision to quarterly figures after the significant upgrades to 2013 output figures released in December for the first three quarters of the year, which has fuelled expectations of upgraded forecasts to show growth for the year after previous predictions of decline.

Ms Davies said the significant revisions last month were down to a combination of late data coming in for Q3 2013 and seasonal adjustments.

“We’re very conscious that the revisions were almost all upwards,” she said. “Guidance is to seasonally adjust five years of data but we have done it with three so it is a young dataset.”

She added that when the ONS releases its Blue Book in September 2014 – the publication of the UK National Accounts – that there may be revisions further back in the series, to 2010, but “they should be more stable”.

A monthly comparison to October 2013 showed a decline of 4 per cent in total output, with new work down by 3.9 per cent.

Turner & Townsend UK managing director Steve McGuckin commented: “The industry grew steadily in the second half of 2013, so the news that its momentum faded a touch in November is a surprise rather than a shock.

“Such a modest dip in monthly output is unlikely to interrupt the construction industry’s upward trajectory. The 3.2 per cent month-on-month decline in private sector housebuilding comes after stellar performance in preceding months.

“November’s surprise dip is a minor distraction for a newly confident industry – for most of us, it remains a case of ‘don’t panic and keep digging’.”

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