Business

Construction sector returns to modest growth

The UK's construction sector has returned to modest growth

THE construction sector returned to modest growth in June after a slowdown over the previous two months, official figures show.

The Office for National Statistics (ONS) said the sector grew by 0.9 per cent on the previous month, below economists' forecasts of a 2.2 per cent uplift, but a welcome bounce back from a 1 per cent contraction in May.

The ONS said: "Despite this increase the data for June 2015 continues a run of relatively weak monthly growth."

It blamed an easing of housebuilding for the slowdown of construction growth. Overall, for the second quarter of the year construction output rose by 0.2 per cent, compared with the first three months of the year, boosted by rises in infrastructure building and other public work.

The ONS added that the second quarter construction figure is higher than the flat output estimate it used to calculate gross domestic product (GDP) for the quarter last month.

But it added this small upward revision to construction did not point to any material revision to the ONS preliminary estimate of 0.7 per cent GDP growth in the second quarter of this year.

Construction output in June was 2.6 per cent higher year-on-year, below economists' forecasts of a 3.3 per cent rise but still the fastest growth since March.

Scotiabank head of European fixed income strategy Alan Clarke said the construction figure for June was "disappointing" but added the "upward revisions to the back data took some of the sting out of the reading".

Construction makes up around 6 per cent of the UK's economy, but the data is volatile, especially on a monthly basis, and can contribute to revisions to overall GDP.

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