UK construction output declined in August as a drop in infrastructure, public work and maintenance offset a surge in homebuilding to its highest level for at least three years.
Construction, which accounts for 6.3% of the UK economy, slipped 0.1% from July, when it rose a revised 2.8%, the Office for National Statistics said.
New private house building increased 1.6% on the month and 18.1% from a year earlier, the biggest annual increase since June 2011.
Construction is being boosted by demand for homes after a government programme allowing purchases with minimal deposits got under way in April.
An index of building activity stayed close to its highest level since at least 2008 in September, according to Markit Economics.
The pickup may ease concerns that the "Help to Buy" programme is fueling a bubble in the property market as the pace of building struggles to keep up with demand.
In the second quarter, the latest period for which a regional breakdown is available, homebuilding was “overwhelmingly driven” by London, where new private housing orders more than tripled, according to the statistics office.
In the three months to August, construction increased 2.4% compared with the previous quarter, suggesting the industry contributed to gross domestic product growth in the third quarter.
Private homebuilding, which accounts for almost 16% of total construction in the UK, surged 8.4% in that period and was up 15.3% from a year earlier.
In August, construction rose 4% compared with the same month in 2012, the biggest increase since December 2011. Today’s report also showed that on a non-seasonally adjusted basis, construction output rose 0.6% in August from July and was up 3.5% compared with a year earlier.
Construction grew 1.9% in the second quarter and added 0.1 percentage point to GDP. The UK economy expanded 0.7% in the period. The ONS is scheduled to publish its first estimate of third quarter GDP on October 25.
