Construction output surges 6.6% to boost UK economy

Aaron Morby 14 years ago
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Construction output has enjoyed the biggest three-month growth spurt since 1963.

New figures from the Office of National Statistics show construction output surged 6.6% in the period April to June 2010, helping boost GDP growth to higher than expected levels.

The dramatic rebound in the industry’s fortunes follows a 1.6% fall in output in the first three months of 2010.

Construction’s startling recovery powered the overall economy into a 1.1% rise in the second quarter, almost twice the rate analysts expected and nearly four times the pace of growth in the first quarter.

In fact, construction’s ability to drive growth was underlined by a 0.4% contribution to overall GDP, equal with the financial services sector as the biggest contributors.

The second quarter increase in construction output amounted to a 5.8% rise compared with the same three months a year ago.

Construction economist Brian Green said the spike in output could be down to the catch-up effects caused by the harshness of the winter in the previous quarter.

But economists warn that this may be as good as it gets. Spending cuts are likely to start to impact on the next set of quarterly figures.

Green said: “This looks like an unexpected last hurrah for construction before spending cuts bite.”

Ian McCafferty, CBI chief economic adviser, said: “The second quarter will have been boosted by a sharp turn in the inventory cycle as firms have taken action to rebuild stocks, as well as strong growth in government expenditure.

“These two factors are likely to fade in the second half of the year, and we expect that growth will be more modest into 2011.”

Analysts also urged caution in interpreting the figures, which were based for the first time on a new monthly survey.

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