Construction output decelerates in Q1

But may pick up again

Data on output in the construction sector show a slowdown in the first quarter of 2005, with total value added output rising by just 1.9% compared with the year-earlier period in the first quarter of 2005, its slowest rate of growth for 11 quarters. By contrast, output in the fourth quarter of 2004 had risen by year on year by 7.1% and for the full year, output rose by 4.5%.

Civil engineering declines

Total output in the civil engineering subcategory actually declined, by 4.8% year on year in the first quarter, perhaps reflecting the government squeeze on capital spending last year.

But even output in the ‘building construction’ subcategory slowed, to 3.5% year on year compared with 8.7% in the fourth quarter.

Will things pick up again?

There are a number of reasons why output could pick up again, however. First, it is not unusual for output to vary quite sharply from quarter to quarter. Second, growth in the number of building permits authorised accelerated in the first quarter, to 9.3% year on year compared with 3.4% year on year in the fourth quarter of 2004. As these projects come on stream, growth in actual construction activity could accelerate again.

The production index for construction is a volume index based on a sample survey of enterprises active in construction and deflated by the appropriate index of output prices.

Fiona Mullen