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Quarterly fall in construction output masks year on year rise

Official statistics show construction output fell 3.3% in the final quarter of 2010 compared with the previous quarter, but rose 6.9% compared with the same quarter in 2009.

The figures published today show that UK gross domestic product fell by 0.5% in the final quarter of 2010, following growth of 0.7% in the previous quarter.

The Office of National Statistics said the dip was clearly caused by the extremely bad weather in December last year. The disruption caused by the bad weather in December is likely to have contributed to most of the 0.5% decline, it said.

Construction intelligence firm Glenigan said the drop in construction output during the final quarter of 2010 confirms its own research, which has shown a sharp fall in the value of new projects starting on site.

“Reduced government funding is increasingly restricting the flow of health, education and other public sector projects, whilst a sluggish housing market has hampered the recovery in private sector activity. December’s severe weather conditions compounded the downturn leaving the value of underlying projects starts during the three months to December 29% down on a year earlier,” said Glenigan economics director Allan Wilen.

The Civil Engineering Contractors Association (CECA) said the results also reflect a continuing negative outlook that has been reported by companies from across the construction industry.

“Sadly there seems to be little in the way of confidence that there will be a turnaround in the industry’s prospects in 2011, and with the full effect of public sector cuts yet to feed through, there may very well be further bad news to come in future quarters,” said CECA external affairs director Alaistair Reisner.

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