…but construction sector delivers fresh gloom

Fears that the British economy contracted in the final quarter of last year were fuelled yesterday by sluggish construction growth figures for November.

Output from the sector increased by just 0.2 per cent month-on-month and fell by 1.2 per cent in the three months to November compared to the year before, according to the official data.

News of the muted growth follows figures suggesting that industrial production contracted 1.2 per cent in the final quarter of 2011, with economists expressing “increasing concern” that the total economy shrank in that period.

Howard Archer, chief UK economist at IHS Global Insight, pictured below, said: “It must be stressed that the data are not seasonally adjusted and it must also be borne in mind that construction output only accounts for 7.6 per cent of GDP.

“Nevertheless, the November output data clearly raise fears that the construction sector contracted in the fourth quarter of 2011 and contributed to an overall decline in GDP.”

Between September and November, new construction work fell by 1.3 per cent, while repair and maintenance went down by 1 per cent.

New public non-housing work suffered the biggest drop with 14.9 per cent less activity in the period compared with the year before.

But there was some cheer as activity increased 14.7 per cent in the new infrastructure work category, 2.8 per cent in new private commercial work and 4 per cent for non-housing repairs and maintenance.

The strong new infrastructure figures are likely to continue into 2012 as constructors seek to benefit from UK government measures to boost major building projects.

ALEX DIAZ AND SCOTT REID