Output falls by 1.5% but 'unlikely' to be Brexit-related

The ONS data showed that the total volume of construction output fell but was 0.2 per cent higher year-on-year.

Output had increased by 0.5 per cent in July compared with June in the immediate aftermath of the vote to leave the European Union, but has showed signs of slipping according to the ONS.

The only sector to report an increase month-on-month was private commercial by 1.5 per cent as well as a 3.6 per cent year-on-year increase in August.

Commercial activity is now at its highest monthly level since May.

All other sectors saw a decline, with notable falls in public R&M work (-6.3 per cent), infrastructure (-5.0 per cent) and private industrial (-2.7 per cent).

ONS senior statistician Kate Davies said: “Construction output has fallen back quite sharply in recent months and contracted by 1.5% in August. 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.”

Note of caution on ONS construction data. Clearly an issue with infrastructure data given that activity has been rising in the past year… pic.twitter.com/d6ad9m1l0b

— Noble Francis (@NobleFrancis) October 14, 2016

But Markit senior economist Chris Williamson argued that the figures showed construction was “on course for its worst quarter for four years and at risk of heading back into recession”.

“Survey data provide a ray of hope, suggesting conditions may have stabilised in September, but it’s clear that the sector remains under pressure from widespread uncertainty about the economic outlook and that growth has, at the very least, consequently slowed considerably since earlier in the year,” he said.

Data from the Markit/CIPS Construction PMI showed the industry recovered slightly in August and has since returned to growth in September.

Overall, all new work dipped by 1.4 per cent in August, compared with July, but it was nevertheless 1.1 per cent higher year-on-year.

On a monthly basis, private housing output dropped by 1.1 per cent compared with July after posting an increase immediately after the EU referendum, but output in the sector was still 9.4 per cent higher year-on-year.