ONS question reports of ‘healthy growth’ in construction

News that we are experiencing strong growth in constructing has been brought into disrepute by new figures released by the Office for National Statistics (ONS).

The Markit/Cips Purchasing Managers’ Index for construction that was released last month clearly indicated a reassuring reading of 58.8; 50 being the point which separates expansion from contraction. Whilst down from 59.9 recorded in the previous month, the report still highlighted strong growth in construction, an industry that is accountable for around 6% of the UK’s GDP.

However, the latest GDP estimate made by the Office for National Statistics revealed quite the opposite to that being reported by Market/Cips, suggesting that construction output actually reduced by 2.2% in the three months to September.

So which report is right!?

Chief UK and European Economist for IHS Global Insight, Howard Archer commented the clear contradictions between the reports raised “considerable doubts” about the overall accuracy of the official construction data given by the ONS. He pointed out that other data compiled by Bank of England regional agents on construction also pointed towards growth within the sector, rather than reduction.

Vice President and Senior Economist of Markit, Tim Moore reaffirmed their own results, saying “The sector remains in rude health. Rather than acting as a drag on the economy, as suggested by recent GDP estimates, the sector is continuing to act as an important driving force behind the ongoing UK economic upturn.”

The ONS had been due to release a report comparing their own figures and those of Markit on 11 September, but this had to be cancelled for “operational reasons”.

Mark Robinson, the chief executive of the Scape Group warns that regardless of whether the industry has experienced growth or not this year, something must be done to attract new talent into construction if we are to sustain a healthy and vibrant industry long-term. He said “Much of the skilled workforce is due to retire in the next five to 10 years and if we can’t train enough new talent to replace them, the construction industry will struggle to deliver the new homes and infrastructure that both the community and the economy badly needs.”

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