Construction output slides in Q4 despite December bounce back

The construction sector had fallen into decline in Q4. Picture: Steven Scott Taylor
The construction sector had fallen into decline in Q4. Picture: Steven Scott Taylor
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Output from the UK construction sector slipped in the final three months of 2015, despite an upsurge in activity in December, official figures yesterday revealed.

The Office for National Statistics (ONS) said building output shrunk 0.4 per cent in the fourth quarter following a 1.7 per cent decline in the previous three months, and failing to meet expectations of a 0.1 per cent drop.

The decline came despite output growing at its fastest pace in December since April 2015 when it clocked up a 1.5 per cent rise compared to the month before.

Growth in the final month of the year was buoyed by a 12 per cent jump in infrastructure work, which rose into positive figures for the first time since July.

The fourth-quarter decline was fuelled by a drop in repair and maintenance work, which saw a 1.4 per cent slip offset by a 0.2 per cent increase in all new work, the ONS figures showed.

Officials reported that UK construction output for the whole of 2015 had grown 3.4 per cent, lower than the “historically strong growth” of 7.5 per cent in 2014.

Overall construction output remains 4.1 per cent below its level in early 2008, just before the nation fell into recession. Howard Archer, UK and European chief economist at IHS Global Insight, the forecasting consultancy, said: “There are some positives for the construction sector going forward, but it is clearly vulnerable to confidence among clients being pressurised by heightened UK and global economic uncertainties.”

“On the positive side, there is increasing government support for housebuilding (which needs to see prolonged decent expansion to make genuine inroads into the UK’s acute housing shortage) while buyer interest in houses is likely to be supported over the coming months by relatively favourable fundamentals.”

The latest data on the construction sector comes after the Bank of England slashed its growth forecasts for the UK economy and voted to keep interest rates on hold at 0.5 per cent last week.

It cut its forecast for UK GDP for the next three years, to 2.2 per cent for 2016, 2.4 per cent in 2017 and 2.5 per cent in 2018.

The ONS also released the latest data on UK trade earlier this week, showing Britain’s trade gap had grown to its highest level since 2010 last year, as the UK saw an £8.1 billion plunge in the export of goods. The deficit – the difference in value between imports and exports – widened by £300 million to £34.7bn in 2015.