LONDON, (Reuters) - British construction output grew faster than previously thought in the first three months of the year, official data showed on Friday, suggesting overall economic growth for the first quarter will be revised higher.
The Office for National Statistics said construction output expanded 1.5 percent between January and March, up from a previous estimate of 0.6 percent, though construction orders data pointed to a less strong second quarter.
The ONS said the data revision would add 0.1 percentage points to its latest estimate of first quarter gross domestic product, and was due to an unusually large number of late data returns from construction firms that gave a different picture to initial figures.
Britain's economy expanded 0.8 percent in the first quarter of this year, keeping up last year's strong growth momentum. The construction sector has been a major driver, recovering along with the housing market.
But while the government is keen to enable more building, it is concerned that house prices and household debt may get out of control.
British finance minister George Osborne said on Thursday that he would give the Bank of England stronger powers to curb mortgage lending, namely by enabling the central bank to stop Britons taking out mortgages that are too big compared with their income or the value of their home.
Osborne also announced changes to planning rules that he said would allow as many as 200,000 homes to be built on former industrial sites in urban areas.
Construction output rose 1.2 percent in April, picking up pace from a fall of 0.2 percent in March.
Thursday's data pointed towards some slowdown in construction in the near term, however.
On an annual basis, output slowed to 4.6 percent in April from 6.8 percent in March as the building of public housing slowed.
Construction orders data for the first three months of 2014, also released on Friday, suggested too that a further slowdown could be in prospect.
New construction orders fell by 6.3 percent in the first quarter, led by a 45.7 percent drop in public housing orders, the biggest since records began in 1964.
"A possible reason for the fall in public housing new orders is that investment in housing associations is coming from private investment rather than a public source," the ONS said.
A separate survey carried out by Markit recently showed Britain's construction industry cooled further in May to a seven-month low but was still growing at a robust pace.
Britain's housing market has seen a stellar recovery over the past year and the rapid rise in house prices has raised concerns that it could be overheating.
Even though recent data has painted a more mixed picture, the Bank of England is expected to announce mortgage controls after its Financial Policy Committee meeting on June 17.
It has said interest rate rises will only be a last resort in tackling pressures in the housing market.
(Reporting by Ana Nicolaci da Costa and David Milliken)