Construction growth falters in August

Construction output contracted marginally by 0.1% in August after a period of sustained growth.

The sector’s seasonally adjusted output grew 1.9% in the second quarter and continued to grow in the succeeding month of July by 2.8% but dipped back in August.

Despite the drop in August, construction output was still 4% up on the previous year.

The slight decrease was apparent in both new work and repair & maintenance, which fell 0.1% and 0.2% respectively.

Private industrial and private housing both saw new work increase by 3.9% and 1.6% respectively, while public other new work and private housing repair and maintenance fell by 3.2% and 1.8% respectively.

When comparing August 2013 with August 2012 construction output increased predominantly due to a 5.5% increase in new work.

Within the new work category, new housing increased by 16.7% while infrastructure fell by 5.5%.

Michael Dall, lead economist at construction intelligence specialist Barbour ABI said the marginal drop in output could be due to a number of factors. “For one, August is the peak of the holiday season so we can expect to see a slight drop in activity. The bigger picture shows year-on-year growth of four per cent, a significant increase and a positive sign.

“Once again, private housing has come out on top as the star performer. We expected to see further growth in this sector and we have not been disappointed. A 1.6% rise from July to August, and 18.1% growth year-on-year is very encouraging.

“This is another supporting statistic that indicates the Help to Buy scheme is having the desired effect in boosting the housing market.

“Just this week, many lenders revealed the mortgage options available to potential home-buyers under the scheme so it doesn’t look as though the Help to Buy effect is going to dip anytime soon.

“That said, private housing wasn’t alone - the private industrial sector also showed strength in August, with output up 3.9% on July.

“Initial construction project data collated by Barbour ABI for September reflects these trends, showing growth in those major sectors, so watch this space - we expect Q3 figures to show strong expansion in construction overall.

“Despite some volatility in the figures in recent months, the industry is certainly heading in the right direction and beginning to turn the corner to a more sustained period of growth.”