Construction sector bounce raises economic hopes

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Hopes for Britain’s economic recovery were kept alive yesterday as figures showed that construction sector activity rose in April and held firm in May amid a revival in building work.

New seasonally adjusted data from the Office for National Statistics (ONS) revealed that output jumped by 4.6 per cent month-on-month in April and remained flat in May.

The figures put the sector on track for growth of more than 2 per cent for the second quarter – an outcome that should go some way to underpinning the wider economic recovery.

However, output in May fell by 4.8 per cent measured on a yearly basis – hurt by bad weather and an additional working day in May 2012, the ONS added.

The construction industry was hit hard by the financial crisis and now accounts for about 6 per cent of the UK economy. Recent surveys have suggested that Scotland is lagging the rest of the UK when it comes to a recovery in the sector.

Howard Archer, chief UK economist at IHS Global Insight, said: “It looks highly likely that construction output made a recently all-too rare positive contribution to [UK] gross domestic product growth (GDP) in the second quarter, thereby helping growth to strengthen and broaden from the first quarter when GDP rose 0.3 per cent.”

He added: “Any positive contribution from the construction sector in the second quarter would feel like a bonus for the UK economy”.

Buoyant conditions in the dominant services sector could see GDP growth pick-up to about 0.6 per cent in the second quarter, experts says.