British construction output stagnated in July as a rapid expansion in house building started to level off, causing annual growth to sink to an eight-month low. However, orders for new work rose at the fastest rate in a year, leaving economists confident that the coming months would bring robust growth, particularly as earlier private-sector surveys have also pointed towards a continued strength.
Construction output was unchanged on the month in July, compared with growth of 1.2 percent in June, the Office for National Statistics said on Friday. Annual growth more than halved to an eight-month low of just 2.6 percent. But orders looked more upbeat, rising by 3.8 percent in the second quarter from the first three months of 2014, the biggest rise in a year. "Signals from survey and order book data suggest the construction industry has fared better than the official output data would have us believe over the summer," said Chris Williamson, chief economist at Markit.
Earlier this week, Bank of England Governor Mark Carney said interest rates could rise in spring if the jobs market continues to recovery at a quick pace. There was little market reaction to the construction figures, with investors fixated on the risk that Scotland could vote to break away from the rest of the United Kingdom in next Thursday's independence referendum. The construction sector was hit hard by the financial crisis but has been recovering since last year along with the broader economy, buoyed by falling unemployment and strong consumer and business confidence.
A separate survey carried out by Markit recently showed Britain's construction industry expanded at its fastest pace in seven months in August, boosting job creation but also putting strain on suppliers. Private sector home building rose 1.1 percent on the month in July, down from 2.0 percent growth in June. The annual growth rate fell to a five-month low of 15.9 percent.
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