UK statistics watchdog raises red flag over construction data

LONDON (Reuters) - Britain's official statistics watchdog said on Thursday that monthly construction output data had fallen below required standards due to the government's failure to improve the quality of the figures.

Construction makes up less than 7 percent of Britain's economy, but output is volatile compared to other sectors, and often accounts for a large share of moves in quarterly gross domestic product data.

Economists are closely watching the sector to see if a slowdown in Britain's housing market in recent months will translate into fewer new homes being built, putting a brake on otherwise rapid overall economic growth.

Construction figures due at 0930 GMT on Friday are forecast to show annual output growth fell by almost two thirds in October to 1.3 percent.

The UK Statistics Authority, the body that checks the quality of official figures, said Britain's business ministry had failed to meet a request first made in 2012 to improve the standard of its data on construction costs and prices.

A new method for calculating construction costs had been due to be used this month, but failed quality checks, and the ministry has said it will not publish data this month.

The Office for National Statistics normally relies on this data to help calculate how fast construction output is growing, and has said it will have to use its own estimates instead.

The UK Statistics Authority said these changes meant that both the ONS construction output data and the business ministry's construction costs data fell below the standard needed for them to count as a "national statistic".

ONS statistician Kate Davies said the ONS was working with the business ministry to improve the new methodology for the data, and expected this to be ready by March.

(Reporting by David Milliken; Editing by Ruth Pitchford)