UK Construction Output Sees 1.5% Fall

The British construction industry was pummelled in August, as an infrastructure slowdown added more pain to the struggling sector in the wake of the EU referendum.

The Office for National Statistics (ONS) said construction output fell by 1.5% in August month on month, in comparison with July’s 0.5% increase, and against economists’ estimates of 0%.

The statistics agency said all new work fell by 1.4%, while repair and maintenance dropped by 1.5%.

Year-on-year figures also painted a bleak picture for the industry, with construction going up by 0.2% compared with August last year, which was way below consensus forecasts for a 1.2% jump.

A major driver of the slowdown was a fall in infrastructure activity which dropped by 5.1% in August after a 6.1% rise in July.

Infrastructure decreased by 9.3% compared to August last year, which the ONS noted marks the sixth consecutive month of year-on-year decreases.

Infrastructure accounts for projects such as roads, water, sewage, electricity and railways.

A senior statistician at the ONS, Kate Davies, commented: “As the fall this month is led by infrastructure, it seems unlikely that post-referendum uncertainties are having an impact.

“Monthly construction data can be quite erratic, though, so we would warn against trying to read too much into one set of figures.”

Meanwhile, total new home building fell by 1.3% compared with July, with new public and private housing dropping by 2.1% and 1.2%, respectively.

The amount spent on repair and maintenance went down to £3.9 billion in August, which was its lowest level since September 2013.

Chief UK and European economist at IHS Markit, Howard Archer, said that the overall contraction in construction activity is likely to weigh down third quarter gross domestic product (GDP) growth.

Construction output accounts for approximately 5.9% of GDP. However, a ramp up in government spending could help revive the industry.

Mr Archer said: “The construction sector will take some heart from Chancellor Philip Hammond prioritising infrastructure and housing initiatives in his fiscal efforts to support the economy.”


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