The UK economy shrank by another 0.8% in the second quarter, according to preliminary figures. While the drop was markedly slower than the 2.4% decline in the first quarter of this year, it was still a much sharper contraction than many analysts had hoped for. It also marked the fifth consecutive quarter-on-quarter decline. The larger than expected fall in second-quarter GDP should hold back excessive optimism regarding the speed and sustainability of any UK economic rebound.Construction – once again – was the main drag on the UK economy. Output plunged by another 2.2% quarter-on-quarter and fell 14.6% on a year ago. This followed a quarterly drop of 6.9% in the first quarter. The seasonally adjusted index of construction output is now down 15% from its peak in the first quarter of 2008 and back to levels seen in the beginning of 2002. 


These preliminary figures are not the official output statistics for construction, which are calculated slightly differently. In addition, the preliminary estimates are subject to sometimes heavy revision. The official construction output statistics will be released in early September only. However, these preliminary figures still confirm the sorry state the industry is in.

Industry forecasters, including the Construction Products Association and Experian released their updates earlier in July.

Experian now forecasts a 12% decline in industry workload this year, compared to an 8% fall previously estimated. The CPA expects a 16% decline this year, compared with 12% forecast in its spring report. For these figures to realise, construction workload needs to at least stabilise in the second half of this year. Whether this is realistic remains to be seen.