Data show further decline in UK construction in February

The Conservatives' chance of gaining a pre-election boost from strong economic growth figures have taken a knock, with official data showing a further decline in the UK's construction industry and anaemic growth in industrial production.

Industrial production output rose just 0.1 per cent in February, compared with the previous year, and construction output fell by 1.3 per cent.

Alan Clarke, economist at Scotiabank, said that disappointing data meant a slowdown in economic growth in the first quarter was now highly likely, which "is not going to make pleasant reading for the coalition government in the final days of the election campaign."

Friday's figures are the last set of hard output data to be released before the Office for National Statistics publishes its first estimate of economic growth for the first quarter of the year on April 28, a little over a week before polling day.

Samuel Tombs, senior UK economist at consultancy Capital Economics, said that first-quarter growth was likely to be "disappointingly weak", with growth perhaps slowing from 0.6 per cent quarter-on-quarter to 0.4 per cent.

Economists have been struggling to juggle conflicting signals about the economy, with survey data remaining strong, but official data coming in weaker than expected.

George Buckley, chief UK economist at Deutsche Bank, said that while he believed the survey data indicated there would be improvement going forwards, "it may be too late to save Q1 GDP especially with construction down for a second month in a row".

Chances of a healthy first quarter reading are now resting entirely on the performance of the UK's dominant service industry, released alongside the Q1 GDP data, which unexpectedly shrunk by 0.2 per cent between December and January after performing exceptionally strongly last year.

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