Economists say upwards revision to construction output not enough

The government has revised up its controversial construction output figure for the first quarter.

The Office for National Statistics said construction output fell by 4% in the first quarter, as opposed to 4.7%.

But economists remained unimpressed and said the upward revision is not enough.

Industry leaders poured scorn on the ONS’s original estimate for construction output in the first quarter, claiming the figure bore little relation to the state of the sector.

Leaders of the Construction Products Association wrote a stinging attack of the ONS this week in a letter sent to chancellor George Osborne.

The letter signed by CPA chief executive Michael Ankers said: “Few in the industry any longer have any confidence in the ONS statistics and this has a serious impact [on how] companies make investment and other policy decisions.”

The weak construction figure was one of the main drags on the overall GDP figure, which showed the economy expanded by 0.5% in the first quarter.

Commenting on the revision, Noble Francis, economics director at the CPA, said: “Whether it’s 4.7% or 4% down that still doesn’t reflect what happened.

“If anything we feel output should have gone up in Q1 rather than down.”

Simon Rubinsohn, RICS chief economist, said: “Data released this morning from the ONS reinforces the message contained in the recent GDP figure that construction output fell more sharply in the first quarter of 2011 than in the final three months of last year.

“We find this conclusion hard to square with much of the anecdotal evidence, whether it is the results of other sector surveys or responses from RICS members.

“The generally mild weather in the early part of this year should, if nothing else, have helped the construction industry.

“Looking forward, there are still significant challenges facing the sector, in particular, the dramatic cuts in the government’s capital spending programme and the continuing difficulties in securing development finance. As a result, even if official numbers are currently understating the resilience of the sector, the recovery in construction output is likely to be particularly sluggish over the course of this year.”

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