BRITAIN’S embattled construction industry saw output slump to its lowest level for more than 13 years in the third quarter after activity plunged in September, official figures revealed yesterday.
The Office for National Statistics (ONS) said output from the construction sector fell 13.1% year-on-year in September as Government spending cuts and a struggling housing market continued to take their toll.
September’s fall left third-quarter construction activity 2.6% lower quarter on quarter and 11.3% down on a year earlier, with output volumes hitting their lowest since the second quarter of 1999.
It is the latest blow to the economy, after data earlier this week showed a worse than expected 0.1% rise in manufacturing output between August and September.
But the construction figures are not expected to trigger a downward revision to estimates that wider UK gross domestic product grew by 1% in the third quarter, as the ONS said it had already factored in a 2.5% quarter-on-quarter decline in construction activity.
Yesterday’s figures highlight the difficulties faced in the construction sector and come just days after major player Balfour Beatty warned over profits, blaming a lack of major projects in the UK.
Howard Archer, chief economist at IHS Global Insight, said: “The construction sector continues to be hampered by major headwinds, notably including public spending cuts, an extended weak economy, a struggling housing sector and problems in getting funding for large-scale projects.
“In particular, the Government’s spending cuts are limiting overall expenditure on public buildings, schools and hospitals.”
However, there are hopes the wider economic recovery will kick-start building work and lead to a turnaround in the construction industry.
The Government is also planning initiatives aimed at boosting infrastructure and house-building work.
The ONS said construction output was dragged lower by a hefty decline in new work within the private commercial sector, which slumped by 17.4% on a year ago to its lowest level in 16 years.