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Fourth-quarter dip in construction output

General trend still upwards despite marginal fall in Q4, says Construction Products Association

GDP figures published by the Office for National Statistics (ONS) earlier this week highlight that the UK economy grew by 0.7% during the fourth quarter of 2013, while construction declined by 0.3% over the same period. Of the four main sectors, construction output was the only one to register a negative result for the quarter.

Commenting on the figures, Noble Francis, economics director at the Construction Products Association, said: ‘The 0.3% decrease in the preliminary estimate for construction in the fourth quarter of 2013 was disappointing but followed an increase of 2.6% in the previous quarter.

Furthermore, between the fourth quarter of 2012 and the fourth quarter of 2013, construction output increased by 4.5%.

‘This GDP estimate shows that the construction industry’s recovery is still in early days. However, this was a marginal fall in the preliminary figures within a general upward trend, and our latest forecasts anticipate a 3.4% rise in construction output for 2014.’

Meanwhile, the Construction Products Association’s latest State of Trade Survey, released on Monday, indicates that sales of construction products rose in the fourth quarter of 2013, driven by wider UK economic growth and key private construction sectors, together with strength in export markets.

Dr Francis, said: ‘In previous surveys, private housing was the key driver of domestic demand; however, the fourth quarter has seen construction growth spread to other key sectors such as private commercial, the largest construction sector, and infrastructure.

‘Importantly, manufacturers reported that, overall, capacity is not a significant issue and is unlikely to be during 2014 despite an expected rise in demand.

‘Of concern, however, manufacturers reported that margins continue to be severely hindered by cost rises, especially in energy and transport fuel. In addition, manufacturers also reported that labour costs and materials costs rose in the fourth quarter.’

Among the key findings of the survey: 67% of heavy-side manufacturers reported that sales rose compared with the third quarter; 61% of heavy-side firms also reported that sales rose in Q4 compared with one year earlier; for 2014 as a whole, 73% of heavy-side firms are anticipating a rise in sales; and, over the next 12 months 24% of heavy-side firms anticipate they will be operating at 90% capacity or above.

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