Belfast Telegraph

Government helps construction firms to increase output

By John Collingridge

Output from the UK's construction sites rose more than first thought between April and June as Government schemes spurred on housebuilding.

The Office for National Statistics (ONS) said construction output increased 1.4% on the first three months of the year – up from an initial estimate of 0.9% – although it was still down 0.5% on the second quarter of 2012 as the sector claws slowly out of its trough.

Experts said there was a slight chance the better-than-expected performance could see the ONS up its initial estimate of 0.6% growth in gross domestic product (GDP) during the second quarter.

Private sector housebuilding surged 7.6% higher from the weather-hit first quarter and was up 8.2% on the second quarter of 2012, boosted by the state's Help to Buy and Funding for Lending stimulus schemes. Work on new social housing soared 12.8% from the first quarter and rose 9.8% on a year earlier.

The official figures also showed construction output dipped 0.7% in June from May, but economists pointed out it followed a 5% month-on-month jump in April.

Howard Archer, chief UK and European economist at IHS Global Insight, said it was "more good news for the UK economy".

"The construction sector is seemingly increasingly shrugging off its long-term problems and is now contributing to growth," he said.

Britain's construction sector weighed on growth for much of the downturn as the slack housing market and slumping spending saw building sites mothballed and thousands of workers laid off.

Its recovery was also hampered by freezing weather in the first three months of the year, which conspired to push construction output to a 12-year low.

But parts of the sector are recovering as Government schemes revive the housing market.

The Help to Buy equity programme was launched in April, offering loans to give people the chance to buy a new-build home with a deposit of just 5%.

Major housebuilders – including Persimmon and Taylor Wimpey – have raised output and grown profits on the back of the scheme.

Another state scheme, Funding for Lending, incentivises banks and building societies to lend more in return for discounted loans and has been credited with improving mortgage availability and reducing rates.

The ONS figures also showed infrastructure work dipped 0.3% quarter on quarter, but was up 6.2% on a year earlier. Private sector commercial work was down 3% on the first quarter and 8.2% down on a year earlier.

Repair and maintenance work rose 1.4% on the first quarter and was up 0.2% on a year earlier.

Belfast Telegraph