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Construction growth in reverse

construction site cropped

The construction sector could be facing a downturn after figures showed it contracted in two consecutive quarters.

Preliminary figures released by the Office for National Statistics show that the industry shrank 0.7% in the third quarter of this year.

This followed a contraction of 0.5% in the previous three months.

Construction has enjoyed two periods of growth either side of the 2008 economic downturn. Data showed an average compound quarterly growth of 0.4% from 2003 to 2007, before the financial crash. Between 2009 and 2014, this rose to 0.7%.

The latest ONS data showed construction output was 2.8% higher in Q3 2017 than in the same period a year earlier.  

The Construction Products Association (CPA) this summer said the infrastructure sector would grow by 25% in the three years to the end of 2019.

CPA economics director Noble Francis today warned that the preliminary ONS construction data was prone to revisions. “Contractors working on major infrastructure projects are still enjoying growth,” he said.

However he added that falls in new orders suggested ”we may see some more falls in quarterly construction output in the next 12-18 months”.

Civil Engineering Contractors Association director of external affiars Marie-Claude Hemming said: “For the second quarter of this year, construction is slowing down the wider economy.

“Despite welcome commitment from the government on infrastructure over the last year, we are not seeing as many schemes brought forward to market as we had anticipated.

“If the UK government is to deliver strong economic growth during and after Brexit, it must commit to the projects outlined in the National Infrastructure Delivery Plan and develop future work within the pipeline.”

A report published by Arcadis last month warned infrastructure construction must increase to more than £95,000 of output per minute to meet national ambitions.

The latest ONS data showed that manufacturing grew by 1% in Q3 of this year, and the services industry grew by 0.4%.

As a whole, UK GDP grew by 0.4%.

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