House building boosts construction

Construction returned to growth in October as a rise in house building helped the sector expand by 2.2%, reaching a near two-year high level of output.

House building helped the construction sector expand by 2.2% in October, figures show

Official figures also showed the sector had performed better than thought earlier in the year, with revisions large enough to add 0.1% to overall gross domestic product (GDP) growth in each of the first and third quarters.

Meanwhile a slump in September was not as bad as had been feared - construction shrank by 0.5% rather than 0.9%.

The latest data from the Office for National Statistics (ONS) showed output for the sector in October reached 9.8 billion, the highest level since December 2011.

New housing work increased by 5.8%, with the market bolstered by Government initiatives such as Help to Buy.

Infrastructure was up 7.5% but other public work fell 5.7% and private industrial work showed a disappointing drop of 5.8%, although new orders for planned projects in this sphere showed promise, up 31.8%.

Data revisions to the construction sector's performance earlier during 2013 would be large enough, on their own, to increase overall GDP growth for the first quarter from 0.4% to 0.5% and for the third quarter from 0.8% to 0.9%.

However, new quarterly GDP estimates to be published next week must also take account of any revisions, upward or downward, in other parts of the economy.

Chris Williamson, chief economist at Markit, said: "The UK construction industry is enjoying a strong and increasingly broad-based recovery, according to the Office for National Statistics, meaning the sector should help boost the economy in the fourth quarter."

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House building boosts construction