GDP growth set to be revised upwards

The construction sector fared better than was thought during parts of last year according to the ONS
The construction sector fared better than was thought during parts of last year according to the ONS

The UK’s economic growth in 2014 looks set to be revised up sharply to 3.1 per cent after major changes to official figures from the construction sector.

Gross domestic product (GDP) last year was previously thought to have increased by 2.8 per cent but the Office for National Statistics (ONS) now looks likely to hike the figure later this month.

New data and changes to methodology mean the performance of the construction sector, which represents 6.4 per cent of GDP, has been revised upward for every quarter of last year and for the first three months of this year.

It is likely to mean overall economic growth at the start of 2015 was not as sluggish as previously thought, implying it will go up from 0.3 to 0.4 per cent, all else being equal, according to the ONS.

Revisions to GDP data will be confirmed on June 30. These will take into account the construction revisions but also any revisions there may have been to data from other parts of the economy.

The construction changes show that in the last quarter of 2014, the sector grew by 0.2 per cent, against a previous estimate that it shrank by 2.2 per cent. In the first quarter of this year it shrank by 0.2 per cent, not by 1.1 per cent as previously thought.

In April, the construction sector shrank by 0.8 per cent, however, reversing an expansion of 1.4 per cent in March.

Samuel Tombs, of consultancy Capital Economics, said: “Today’s UK construction output figures vindicate our view that recent official estimates of GDP growth have understated the strength of the economic recovery.”

GDP growth at 3.1 per cent would be the strongest in more than a decade, topping the rate of three per cent seen in 2006. It was last higher, at 4.3 per cent in 2003.