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Britain's GDP may have lost by bigger rate
By Fiona Shaikh and Matt Falloon |
June 6, 2009, Saturday
|
Print Edition
Print Edition
THE British economy may have contracted at a much sharper rate than previously thought in the first three months of this year, official statisticians said, after major revisions to construction output figures.
New data from the Office for National Statistics yesterday showed construction output fell 9.0 percent in the first quarter, the steepest fall since 1963 and much worse than the 2.4 percent decline previously estimated.
The ONS said that was likely to knock 0.3 percentage points off first-quarter gross domestic product, already estimated to have contracted by 1.9 percent in the three months to March, which was the steepest decline since 1979.
"If there were to be a significant upward counterweight to the construction figures, we may well have had it by now. We may well be in for a downward revision to the prevailing Q1 figure," said Philip Shaw, economist at Investec.
If none of the other GDP components were revised, the change in construction output would push the fall in GDP down to 2.2 percent, still a 30-year low, according to the ONS.
The economic downturn has dealt a heavy blow to the construction sector, which accounts for some 6 percent of Britain's economy.
Yesterday's data, revised back to 1955, showed housing construction output fell by 10 percent in the first quarter, with new work down 8 percent.
Non-housing construction output slumped 21 percent on the quarter but infrastructure output rose 2 percent.
However, recent surveys suggest the pace of decline may be slowing, helped by government spending and signs of improvement in the housing market.
"Recent modestly but steadily increasing housing market activity - and increased optimism about the outlook - is starting to feed through to support house building activity," said Howard Archer, economist at IHS Global Insight.
Construction firms have laid off thousands of workers during the recession but some signs are also emerging from within the industry that conditions might be starting to improve.
House builder Bellway said yesterday that the company was looking to purchase land and reopen sites.
New data from the Office for National Statistics yesterday showed construction output fell 9.0 percent in the first quarter, the steepest fall since 1963 and much worse than the 2.4 percent decline previously estimated.
The ONS said that was likely to knock 0.3 percentage points off first-quarter gross domestic product, already estimated to have contracted by 1.9 percent in the three months to March, which was the steepest decline since 1979.
"If there were to be a significant upward counterweight to the construction figures, we may well have had it by now. We may well be in for a downward revision to the prevailing Q1 figure," said Philip Shaw, economist at Investec.
If none of the other GDP components were revised, the change in construction output would push the fall in GDP down to 2.2 percent, still a 30-year low, according to the ONS.
The economic downturn has dealt a heavy blow to the construction sector, which accounts for some 6 percent of Britain's economy.
Yesterday's data, revised back to 1955, showed housing construction output fell by 10 percent in the first quarter, with new work down 8 percent.
Non-housing construction output slumped 21 percent on the quarter but infrastructure output rose 2 percent.
However, recent surveys suggest the pace of decline may be slowing, helped by government spending and signs of improvement in the housing market.
"Recent modestly but steadily increasing housing market activity - and increased optimism about the outlook - is starting to feed through to support house building activity," said Howard Archer, economist at IHS Global Insight.
Construction firms have laid off thousands of workers during the recession but some signs are also emerging from within the industry that conditions might be starting to improve.
House builder Bellway said yesterday that the company was looking to purchase land and reopen sites.
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