GDP figures spark row over real state of construction

Grant Prior 12 years ago
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Industry experts have cast doubt over Government figures which show construction output falling by 4.7% during the first quarter of this year.

The numbers have also sparked a review of how the Office for National Statistics compiles its construction numbers.

Construction Products Association Chief Executive, Michael Ankers said: “Today’s GDP estimate includes a fall in construction output of 4.7% in the first three months of the year.

“The scale of this fall in the official figures is extremely surprising and is not consistent with information from construction industry surveys or the experience of the companies and sectors that the association represents.

“The indications are that the construction industry performed better in the first three months than the ONS figures suggest.

“The industry was helped partly by an element of ‘bounce back’ from the last few weeks of 2010 when the extreme weather severely curtailed construction activity in many parts of the country, and also by the exceptionally mild and dry weather throughout the whole of the first quarter of the year.

“Looking forward, however, the outlook remains very uncertain. The real challenge for the industry is the effect of the public spending cuts in the Comprehensive Spending Review which only really started to have an impact from the beginning of the new financial year in April, and in the short term we do not believe that construction spending in the private sector will be sufficiently strong to compensate for these cuts.

“As a result, the Association’s latest construction forecasts, published in mid April and put together by representatives from across the construction industry, anticipate a fall in output of 1% this year compared with 2010 and a further 2% fall in 2012.

“We are not anticipating a return to growth until 2013, and inevitably this will be a constraint on recovery in the wider economy as construction accounts for nearly 10% of GDP.”

Number crunchers at the ONS  are concerned that construction companies are using invoices, which can reflect work completed up to 120 days earlier, to supply information about the value of work done over a period.

Graham Sharp, head of construction statistics at the ONS, told the Financial Times: “A number of the businesses we were chasing for data started telling us they had just finished the invoices and could now fill in the forms.

‘The problem is, some of the invoices could be relevant to work done in an earlier period and not the one we are looking at.”

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