UK construction recession deeper than estimated

Latest data from the UK’s Office of National Statistics (ONS) show that construction output fell by 5% in the first quarter of 2012, considerably worse than the estimate of -3% that ONS previously indicated for GDP in the 1Q.

Commenting on these latest figures, Noble Francis, Economics Director at the Construction Products Association said:  “The construction industry is now firmly back in recession and, although there are some areas of growth, such as private housing, the overall picture shows an industry clearly suffering from the effects of public sector cuts. Public housing output fell 11% during the first quarter of 2012 and public non-housing, which covers education and health, fell 7% in 1Q. Equally worrying, although government expected that the private sector would fill the void, the 1Q figures show that this was not the case. Construction output in the private sector also contracted in 1Q, suffering from poor confidence and lack of lending. Private commercial, the largest construction sector, fell by 7.1% in 1Q.

“The fall in construction during 1Q is greater than ONS estimated for GDP just a few weeks ago and it is clear that this will have a negative impact upon 1Q GDP, making the recession significantly worse than initially expected. Unless confidence and lending improves significantly, private sector construction will remain subdued and the effects of further public sector cuts are likely to ensure that construction has a negative impact on the wider economy over the next 12 months.”