UK economy gathers strength

The recovery in the UK economy gathered strength over the second quarter, with growth of 0.6%, the latest GDP figures have shown.

The Office for National Statistics said the economy grew 0.6% in the second quarter of 2013, compared with the first quarter, with output in the construction industry up 0.9% compared with the previous quarter– although Q1 construction output was at its lowest level since Q1 2001.

The last time construction output saw quarterly growth was the final quarter of 2012, when output grew 1.7%.

The figures also revised up the Q1 estimate of a 2.5% contraction in construction output to -1.8%.

Overall construction contributed just 0.05% the growth, due to the sector’s smaller overall share of the economy.

The ONS said all four main industrial groupings within the economy - agriculture, production, construction and services - increased in Q2 2013 compared with Q1 2013, with largest contribution to growth from services, which was up 0.6% and contributed 0.48 percentage points to the 0.6% increase in GDP.

GDP was also 1.4% higher in Q2 2013 compared with the same quarter a year ago, although Q2 2012 contained an extra bank holiday for the Queen’s Diamond Jubilee.

Noble Francis, economics director at the Construction Products Association, said: “Construction output was at its lowest in 12 years in the first quarter; however, information from within the industry suggests that the first estimate of 0.9% growth will be revised upwards in the ONS’s second and third estimates. 

“We’re encouraged to see that all four major sectors within the UK economy are growing.  It looks likely that forecasts for the sector and wider economy will be revised upwards.”

UKCG director Stephen Ratcliffe said:”The estimated increase in construction activity is encouraging - though we should not forget that the sector has still shrunk over the last 12 months.

“Bringing forward public sector investment in construction projects will help sustain any recovery. The government has recognised the importance of the construction sector and the industry will continue to work with ministers to develop a clearer pipeline of work in order to build further industry confidence”.

Michael Dall, lead economist at construction data provider Barbour ABI, said: “Today’s rise in GDP is welcome news for the UK economy and equally indicates a positive shift in the construction sector which appears to be showing small improvements following a period of poor performance.

“Although a major upturn in output in the construction sector is yet to be seen - monthly growth was positive in April, up by 4.8%, and May saw output remain even - we are seeing some encouraging signs and, looking beyond the numbers, there is an air of optimism.

“Certain sub-sectors of the construction industry appear to be responding more immediately to this change in outlook, for example, as reports have shown this week, the Help to Buy scheme is beginning to drive some improved trading conditions for housebuilders.

“If the sector can build on this positivity and the slightly improved output of late, we hope to see the construction industry contributing further to overall economic output growth in the UK.”

<a href="//infogr.am/UK-GDP-vs-Construction-output" style="color:#acacac;text-decoration:none;" target="_blank">UK GDP vs Construction output</a> | <a href="//infogr.am" style="color:#acacac;text-decoration:none;" target="_blank">Create infographics</a> </p>