Construction grows 1.8% in January

Construction output rose 1.8% in January, compared to December, and was up 5.4% year-on-year, the latest official figures have shown.

But the Office for National Statistics figures also revised down output in the final quarter of last year, from quarter-on-quarter growth of 0.2%, to a fall of 0.2%.

This downwards revision puts the output figure in Q4 close to the ONS’ original estimate of a 0.3% fall, which was revised upwards in its second estimate.

The month-on-month increase in January comprised a slight rise (0.8%) in new work, and a 3.5% increase in repairs and maintenance work.

Meanwhile the figures also showed new orders in Q4 2013 were up 1.5% compared to Q3, largely due to a 5.2% increase in orders for new housing.

All other work fell 0.4% over the same period, dragged down by a 22.2% (£590m) decrease in orders for infrastructure.

Paul Connolly, managing director of cost management at Turner & Townsend, said: “The recovery is real - but dotted with caveats. Such mixed data neatly illustrate both the strengths and the weaknesses of the construction industry’s progress.

“The headline figures are impressive - with growth of 1.8% in January alone, total output is now half a billion pounds higher than it was at the same time last year.

“And the overall pipeline picture is rosy - new orders in the last quarter of 2013 were up 1.5% over the previous three months.

“But much of this growth is heavily focused on housebuilding. Outside the buoyant residential sector - which is up by a truly remarkable 35% in a year - things are much less encouraging.

“Infrastructure output sank by 2.3% in January - and is 3.2% down on the same time last year.

“The regional picture remains patchy too. The North / South divide continues, and outside London much of the growth is concentrated on the university and learning hubs, where lack of supply risks driving up input prices.

“Inward investment remains strong as foreign players continue to see the UK as an attractive market in which to place their money, and Britain’s construction industry is steadily rolling out its latent capacity to meet growing demand.

“But while the boom in housebuilding says much about consumer confidence, the continued stagnation in infrastructure is a worry. The £100bn promised in last year’s Spending Review won’t begin to flow into UK infrastructure for another year.

“Construction has always been a barometer of economic sentiment, but at its best it can also drive truly broad-based economic growth.

“It’s great that the industry is responding to the surging demand for homes; but until the funding environment for infrastructure projects improves, construction will struggle to fulfil its full potential as an engine of growth for the wider economy.”