UK construction output returns to growth in June

British construction output returned to moderate growth in June, recovering from a slowdown seen in April and May, official data showed on Friday.

For the second quarter as a whole, the Office for National Statistics said output was up by 0.2 percent from the first quarter, compared with an estimate of unchanged output which it had used to calculate gross domestic product last month.

The ONS said this small upward revision to construction did not point to any material revision to its preliminary estimate of 0.7 percent GDP growth in the second quarter of 2015.

In June alone, construction output rose 0.9 percent on the month, below economists' forecasts of a 2.2 percent pick-up. But falls in output in April and May were revised to be smaller than previously stated, with output falling 1.0 percent in May compared with an earlier estimate of a 1.3 percent fall.

On the year, output in June was 2.6 percent higher, below economists' forecasts of a 3.3 percent rise but still the fastest growth since March.

However, looking at the second quarter as a whole, annual output growth was the slowest in two years and just 2.4 percent higher than in the second quarter of 2014.

Construction makes up 6 percent of Britain's economy, but the data is volatile, especially on a monthly basis, and can contribute to significant revisions to overall GDP.

Construction fell sharply after the financial crisis and was slow to recover. It gained pace early last year but then weakened towards the end of 2014, as a temporary slowdown in the housing market reduced the construction of new homes.

Mark Robinson, chief executive of Scape Group said: “Today’s data shows a 0.9% rise in construction sector output in June, reversing the trend of the last few months, which is great news for the construction industry. After a slow start to the year and uncertainty around the general election, the market is feeling more confident and the industry is starting to bounce back. Output in June 2015 was also 2.6% higher than the same time last year – mirroring the growth in the wider economy.

“Of particular interest in today’s figures is the strong showing of the public sector, which has outperformed the rest of the industry. Public sector infrastructure output is up an impressive 21.8% on June last year, while other public sector construction work is up 3.5% on last month and 1.2% on Q1 2015. Public sector investment in new infrastructure and buildings is clearly driving construction growth and helping to boost the economy.

“Looking ahead, all eyes will be on the government’s November Spending Review and we hope to see the government’s commitment to investment in infrastructure continue.”

Friday's data suggested this trend may be coming to an end, with private-sector home-building up 3.9 percent on the quarter, the biggest rise since the third quarter of 2014.

Overall levels of home-building in Britain remain well below the levels needed to meet demand, the Royal Institution of Chartered Surveyors said on Thursday as it forecast further rises in house prices.

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