Britain’s construction sector experienced a sharper slowdown than first thought at the end of 2014 as the boost from a buoyant housing market appeared to fizzle out.
Figures from the Office for National Statistics suggest the first quarterly decline in output for the sector since the start of 2013, echoing other signs of waning activity in the housing market.
Overall, construction output in the final quarter of 2014 was down 2.1% on the previous three months, the ONS said. That was worse than previous estimates of a 1.8% drop. But the revision is not expected to have an impact on the estimate 0.5% growth for the economy as a whole in the fourth quarter.
For December alone, construction output rose by 0.4% month-on-month, following drops in November and October.
Economists cautioned against reading too much into the latest construction release and said there were reasons to expect the sector to rebound.
“While construction output has come off the peak levels seen earlier in 2014, particularly in housebuilding, and activity can be erratic, the 2.1% quarter-on-quarter contraction in the fourth quarter does seem to markedly overstate the sector’s weakness,” said Howard Archer, chief UK economist at IHS Global Insight.
“Latest surveys on construction activity are relatively healthy and there is good reason to think that the construction sector will see clear output growth in the first quarter of 2015.”
After a deep recession, construction, which makes up about 6% of the UK economy, is still not back to its pre-crisis strength. But the ONS said for 2014 the sector grew by 7.4%, its strongest expansion since 2010.
The fourth-quarter slowdown came as repair and maintenance output experienced its biggest quarterly drop for five years, falling by 6.3%. The ONS said the drop may be down to local authorities cutting spending on maintaining public housing stocks.
New housing output fell 0.2%, the first drop since the first quarter of 2013. But output rose for both the infrastructure and commercial subsectors of construction.
