Optimism as construction sector bounces back

New housing still in the doldrums according to the ONS
New housing still in the doldrums according to the ONS

Britain’s construction sector bounced back in March adding to hopes that the wider economy’s weak start to 2015 was not as bad as thought and that first quarter figures could be revised up.

The industry grew by 3.9 per cent month-on-month after falls in January and February, according to the Office for National Statistics (ONS). It was the strongest rate since January last year, with the improvement led by repair and maintenance spending.

However, there was little sign of a much-hoped-for upturn in home building as new housing, while up on the month, saw its worst quarter for nearly three years.

The overall construction sector data means that while it still shrank - by 1.1 per cent - over the first three months of this year, this was not as bad as the 1.6 per cent contraction previously estimated.

The figures add to official data earlier this week showing the industrial production sector also did slightly better than was thought over the quarter.

Early estimates were produced as part of gross domestic product (GDP) figures published at the end of last month showing the economy grew by 0.3 per cent, a sharp slowdown from the end of 2014 and weaker than the struggling eurozone.

The improved pictures for each sector are on their own not enough to boost the overall headline economic growth number but together they could have an effect, it was argued.

A second estimate of GDP figures will be published on May 28 along with data for March from the dominant services sector, which represents more than three quarters of UK output.

While the new data showed the sector did not do as badly as previously thought over the first three months of the year, it was still a second quarter in a row of contraction.

The sector remains smaller than at its pre-recession peak in 2008.