A surge in public sector housebuilding helped the construction sector return to health in September, according to official figures.
Housing Associations and other publicly funded bodies reported their biggest monthly jump in building activity since 1997.
Alongside an increase in factory and infrastructure building, that helped boost the construction sector to a 1.8% rise in output during September, after a 3.0% decline in August. Annual growth reached 3.5%.
The Office for National Statistics said a strong flow of housebuilding over the last year was single biggest factor in revitalising the sector, after a 22.3% increase in activity since September 2013.
Analysts said the buoyant September showed that August had been a blip in an otherwise consistent pattern of growth that should maintain the industry’s momentum for the rest of the year.
However, slowing growth in private housebuilding and cuts in spending on repairs and maintenance appeared to reflect the broader slowdown in activity across the economy.
Housebuilders are enjoying bumper profits after two years of rising home completions and soaring prices, but have become more dependent on public sector funds as private developers take a more conservative view of future work and restrict the flow of land for building.
Reflecting the industry’s delayed recovery from the financial crisis, the ONS said output has increased by 9.2% since the crash but still remains 8.2% below the level in the first three months of 2008.
Chris Williamson, chief UK economist at financial data provider Markit, said: “After alarm bells were rung in the UK construction sector in August, when output fell dramatically, the sector staged a partial recovery in September to record healthy growth over the third quarter as a whole
“However, looking forward, the sector is likely to see the rate of expansion continue to cool as the UK moves towards the end of the year and into 2015.
“The housing market has slowed since earlier in the year, most likely due to a combination of factors which include the tightening of lending rules introduced in the Mortgage Market Review, homebuyers’ worries about future interest rate hikes and house prices simply being historically high.
“It’s not just the residential property market that is cooling. Growth of commercial property development has also slowed since earlier in the year, according to data compiled by Markit and Savills, which adds to the sense that the economy as a whole is moving down a gear in the second half of 2014.
“At the moment, however, any slowing merely looks to be a moderation from historically higher rates of growth earlier in the year, and will pose little concern to policymakers.”
