Marginal decline in construction output in fourth quarter

But fundamentals remain positive, says Construction Products Association’s director of economics

ACCORDING to the Office for National Statistics (ONS), UK GDP rose by 0.5% in the fourth quarter of 2015. Within this, construction output was marginally weaker, by 0.1%, its second consecutive quarterly fall following the third quarter’s 1.9% decline.

Commenting on the ONS’s figures, Professor Noble Francis, economics director at the Construction Products Association, said: ‘Construction output endured a slowdown in the third quarter of 2015 and experienced mixed fortunes during the final quarter.

‘However, the ONS’s figure of –0.1% is broadly flat and needs to be taken within the context that this is the ONS’s preliminary estimate of UK economic activity, with only around 40% of the data available.’

He pointed out that the figure is likely to be revised when the full set of data is available, and said construction had experienced a similar situation almost a year ago when it was initially reported that the sector had two consecutive quarters of declining output but, subsequently, upward revisions occurred to both quarters.

Prof Francis continued: ‘The key fundamentals in the construction sector are positive. Our latest forecasts anticipate growth in 2016 of 3.8% in construction output, based upon growth in house building, commercial offices and infrastructure.’

But he warned there were considerable risks to the forecasts, due to skills availability and concerns about the potential impacts of both global economic volatility and the EU referendum on the UK economy and investment in construction.