Optimism after July construction output rise

Output growth in Britain’s construction sector maintained momentum in July, official figures yesterday revealed, and there were signs of further expansion to come.

The upbeat data will add to hopes that the economy is picking up speed in the third quarter and is sure to be welcomed by Chancellor George Osborne. His plans to boost housing have been criticised for not doing enough to spur new home-building.

The Office for National Statistics said construction output rose 2.2 per cent in July compared with June and was 2 per cent higher in year-on-year terms. In June, output fell 1.1 per cent on the month and rose 2.2 per cent in year-on-year terms.

Britain’s construction industry was hit hard by the financial crisis but has shown signs of a recovery in recent months, helped by a broader pickup in the economy and by UK government and Bank of England efforts to encourage mortgage lending and new home-building.

Scott Corfe, managing economist at the Centre for Economics and Business Research (CEBR), said: “Overall, the latest official data on construction are encouraging and we expect the sector to start making a more positive contribution to economic growth over the coming months.”

Howard Archer, chief UK economist at IHS Global Insight, the forecasting consultancy, added: “Of critical importance to the [construction] sector going forward is that the economy and housing market activity sustain their recent improvement, and that this increasingly stimulates building work.”