Double-dip data pins problem on construction sector

Figures published by the Office for National Statistics (ONS) on 25 April show a 0.2 per cent contraction in the economy, suggesting the UK has slipped back into recession for the first time since the 1970s.

Chancellor George Osborne called the figures "disappointing" and blamed both the European crisis and Britain's spending in the "good years".

A recession is defined as two consecutive quarters of negative growth, and ONS Gross Domestic Product (GDP) data point to poor construction output as the underlying cause. Figures show:

• the seasonally adjusted index of construction output decreased by 3.0 per cent in Q1 2012, following a decrease of 0.2 per cent in the previous quarter
• construction output decreased by 0.5 per cent between Q1 2011 and Q1 2012.

Commenting in a Guardian editorial piece an ONS spokesperson said, "The economy has recovered less than half the output lost during the recession in 2008 and 2009".

The construction sector responded rapidly to reports of another recession. Noble Francis, Economics Director of the Construction Products Association, called the contraction in GDP 'unsurprising' and went on to say:

"Given that independent economic analysis has shown clearly that for every £ spent in construction, £2.84 is generated for the wider economy, it is essential that government does its utmost to switch its current spending towards the more productive capital spending."

Brian Berry, Federation of Master Builders Chief Executive commented:

"It’s a sad fact that the building industry has been in recession for four years with little hope of any immediate recovery. Until we get builders building again the economy is not going to recover."

Some commentators disagree with the ONS's data. Writing on 'This is Money' Alex Brummer points to the Purchasing Managers Index which, 'showed a fairly strong recovery in March, climbing from 54.3 to 56.7.'

However Judy Lowe, deputy chairman of industry body CITB-ConstructionSkills suggests:

"While output is expected to increase in 2013 by 4 per cent, growth over the next five years is going to be slow and uneven."