Construction sector bounce raises economic hopes

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.