Construction output and GDP for quarter 4 2019

On 11 February 2020 the Office for National Statistics (ONS) released the latest data on construction output and UK gross domestic product (GDP) for Quarter 4 (October to December) 2019.

Figures show that UK GDP was subdued in Quarter 4 2019. This was unsurprising given the evidence that businesses had been stockpiling goods and materials ahead of the UK’s scheduled departure from the EU (originally scheduled for 31 October 2019 and later moved to 31 January 2020). This Quarter also saw the first December general election in almost a century which no doubt added to a lack of business confidence. Latest figures from the ONS show that the slowdown in growth was largely due poor industrial output. Manufacturing has fallen for three consecutive quarters and we saw production output fall to 0.8%.

The Bank of England expected construction activity to have reduced during Quarter 4 due to delays caused by economic and political uncertainty. However, the latest ONS figures show an increase for construction output between October and December 2019; stronger than originally anticipated. For the final Quarter we saw the output for construction increasing by 0.5% from the previous period. This was mainly driven by 0.8% growth in new work. The largest contributions for output came from private commercial and public new housing sectors which grew by 2.5% and 8.4% respectively.

Total construction output increased by 2.5% in 2019 compared to 2018. Although this increase follows a 0.0% growth in 2018, 2019 figures are still lower than what we saw in 2014 and 2017. The majority of annual growth was due to new work, which grew 3.4% following a 0.4% fall in 2018. New work accounts for approximately two-thirds of all work, while repair and maintenance accounts for approximately one-third of all work. Repair and maintenance growth since 2015 has continually been lower than new work growing by 0.7% in 2019.

Caroline Gumble, Chief Executive at the CIOB, commented: “The UK economy was subdued towards the end of 2019 due to weak industrial output. However, the construction industry has continued to grow despite the economic slowdown and political uncertainty. We believe the majority of growth for the sector is due to new work in infrastructure and private commercial projects. The upcoming Budget and National Infrastructure Strategy needs to take the construction sector into consideration to ensure there is a focus on a pipeline of well-planned projects. This will support sector jobs across the UK and ensure that the construction industry continues to grow.”