Growth in UK construction output continues

By Helen Wright13 December 2013

The recovery in construction output in the UK continued in October, with the Office for National Statistics (ONS) reporting a 5.3% increase year-on-year.

The data for October comes after steady growth in the last two quarters, following a prolonged period of predominantly negative growth which began in the third quarter of 2011.

There were year-on-year increases in both new work (up 5.1%) and repair and maintenance (up 5.6%) in October.

Construction output also grew 2.2% in October 2013 when compared with September 2013, with increases in both new work (2.4%) and repair and maintenance (2%).

Steve McGuckin, UK managing director at consultancy Turner & Townsend, said housing construction was playing a big part in the recovery.

“Housing sector construction in October was up by a fifth on the same time last year, and the sector's order books have increased by an incredible £1.2 billion (€1.4 billion) in the same period.

“With new orders up by 41%, residential construction is now accounting for almost a fifth of all construction output - and it has more than mitigated the falling levels of infrastructure output.”

Inflation warning

However, McGuckin warned of the risk of inflation. "After so many years of weak demand and reduced supply, the market is now suffering growing pains. Supply of building materials in the fastest-growing regions is struggling to keep up with demand.

"This is driving up input prices, and many in the industry are predicting further price rises of 3% to 8% next year. The industry's capability will continue to expand, but inflationary pressures could erode profit margins."

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