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Output revised down as recession fears mount

The Office for National Statistics has revealed that construction output declined by 0.9 per cent in Q3 – marking a downwards revision from its initial estimate of 0.7 per cent published last month.

This follows a fall of 0.5 per cent in Q2, with two consecutive quarters of decline putting the industry in a technical recession.

The revision comes after output in September plummeted 1.6 per cent month on month, dragging down the overall third quarter decline.

September’s drop was attributed to a 2.1 per cent fall in repair work and a 1.3 per cent decline in maintenance work compared with August.

The figures will add to concerns of a slowdown in industry activity.

However, a survey by the Construction Products Association released earlier this week recorded growth in activity for Q3.

Commenting on the ONS figures, CPA senior economist Rebecca Larkin said: “At a headline level, today’s data shouts ‘construction recession’, marked by two consecutive quarters of falling output.

“However, output remains at relatively high levels – 1.1 per cent higher than a year ago and 7.1 per cent higher than Q3 2015.    

“There is also a clear variation in performance by sector, as highlighted in the CPA’s forecasts.”

She added: “Nevertheless, areas of weakness include private commercial, where new orders have fallen for three quarters and signal a lack of offices and retail projects to replace those now coming to an end.

“This is echoed in the public non-housing sector, which is suffering from lower volumes of work on schools and a dearth of new large hospitals projects.” 

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