- Howard Archer, an economist at IHS Global Insight
Output in the U.K.'s construction sector, which accounts for around 6.3% of total gross domestic product, was flat in July from the previous month, resulting in a decline of the annual growth rate to the lowest level in eight months as an expansion in private house building began to level off. Construction output rose an annualized 2.6% down from a three-month high of 5.3% recorded in June. However, orders for new work advanced at the fastest rate in a year, leaving analysts confident that the coming months would bring robust growth, particularly as private-sector data released earlier have also indicated an ongoing strength. The construction sector was severely impacted by the financial crisis but has been recovering since last year along with the broader economy, supported by falling unemployment and strong consumer and business confidence. A separate survey conducted by Markit recently showed Britain's construction industry expanded at its fastest pace in seven months in August, prompting job creation but also putting strain on suppliers. The latest government data on housing starts also suggest the construction sector stays on solid footing as more housing starts help the sector increase its output. The latest data showed there were 36,000 new housing starts in England during the three months ended June an increase of 18% on the same quarter last year. Still, economists argue the number remains significantly below the current demand on the property market, driving house prices strongly upward.
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