Housebuilding boom helps UK construction grow at fastest pace in a year

EMBARGOED TO 0001 MONDAY DECEMBER 9 File photo dated 18/09/18 of construction workers. Fewer than one in four construction workers regularly pay into a workplace pension, showing they are being "failed" by the Government, a union has claimed.
New figures reveal the state of Britain's construction industry. Photo: PA

Britain’s construction industry rebounded at the fastest pace in a year in November as private housebuilding picked up in spite of a shrinking UK economy, official figures show.

Output leapt by 1.9% in a month to £13.8bn ($17.9bn) of work in November, the most recent data available, marking a stark reversal of fortunes after a dip in activity the previous month caused partly by poor weather. Analysts had expected a far smaller 0.6% rise.

It was the biggest monthly leap since last January and came in spite of an unexpected 0.3% decline in overall GDP in November, with the wider economy stumbling in the run-up to the general election.

“Much of the monthly increase in November 2019 came from private housing new work,” according to the Office for National Statistics (ONS), which released the figures.

The ONS data pointed to a £135m ($175m) surge in the value of private housebuilding projects to more than £3bn ($3.9bn) of work in November.

Private residential work lurched from a 4.9% decline the previous month to a 4.6% jump in the penultimate month of 2019, rising faster than any other construction sub-sector. New public housebuilding projects also rose 1% to £588m ($763m), with a striking 18.4% increase over the year.

READ MORE: UK economy shrank significantly ahead of the general election

The data marks a contrast with more recent survey data published last week, which showed another sharp decline in overall construction output reported by purchasing managers in December.

The survey, compiled by IHS Markit and the Chartered Institute of Procurement & Supply, showed a 44.3 reading on its headline index of performance, with figures below 50 showing decline.

Construction activity in the month to November 2019, with private housebuilding picking up.
Construction activity in the month to November 2019, with private housebuilding picking up. Chart: ONS

Tim Moore, economics associate director at IHS Markit, had said the survey data suggested construction firms “limped through” the final quarter of 2019, hurt by Brexit and general election uncertainty.

But some 2019 industry surveys have tended to paint a bleaker picture than official figures suggest.

Moore had also said firms hoped a “more predictable” political landscape and clarity over Brexit could boost clients’ willingness to spend this year, suggesting output could continue to improve in the months ahead.

READ MORE: UK house prices leapt at fastest pace in a year last month

There are also more positive signs on the horizon for housebuilding in particular, seen as one of the more resilient areas of the sector in recent years.

The UK property market has seen an uptick in prices and demand remain steady despite political uncertainty in recent months.

Figures published last week by Halifax showed a reversal of the monthly decline in prices seen in October and November, with gains in November and the fastest price growth in a year in December.

UK construction output, according to the Office for National Statistics. Chart: ONS
UK construction output, according to the Office for National Statistics. Chart: ONS

Average property prices in December were up 1.7% on the month and 4% over the year, according to Halifax’s widely watched figures, taking the average UK property value to just under £239,000.

Marc von Grundherr, director of London estate agent Benham and Reeves, said at the time estate agents had seen an “almost immediate uplift’ in buyers’ interest and commitment after the Conservatives’ election victory on 12 December.

“Whether or not you agreed with the outcome, last month’s election helped to reignite the smouldering embers of an otherwise weary property market,” he said.