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Construction industry churns out its weakest performance for four years

Published 11/11/2016

The Office for National Statistics said construction output rose 0.3% in September
The Office for National Statistics said construction output rose 0.3% in September

Britain's construction industry churned out its weakest performance for four years in the first three months after the Brexit vote.

Figures from the Office for National Statistics (ONS) have painted a gloomy picture of the industry, with output falling by 1.1% in the third quarter compared with a 0.1% fall in the quarter before.

The slump was largely driven by a 3.6% drop in repair and maintenance, which was partly offset by a 0.3% increase in all new work.

However, the sector bucked expectations of a September slowdown thanks to a jump in infrastructure work.

The ONS said construction output rose 0.3% in September, up from a revised 1.1% fall in August and above economists' expectations of a 0.4% drop.

Howard Archer, chief UK and European economist at IHS Global Insight, said it was a lacklustre end to a poor quarter from the construction sector.

"September's rise of 0.3% was insufficient to prevent construction output clearly contracting in the third quarter, by 1.1% quarter-on-quarter," he added.

"This was the weakest performance since the third quarter of 2012. In fact, by contracting 1.1% quarter-on-quarter in the third quarter after a dip of 0.1% in the second quarter, the sector is effectively in recession."

Infrastructure work expanded 3% month-on-month in September, while public housing clocked up 5.5% growth and private house building was flat.

The rise in infrastructure work helped offset a poor performance from repair and maintenance, which slipped 1.4% month-on-month in September.

ONS statistician Kate Davies said: "Construction fell overall in the third quarter, with small rises in infrastructure and public building work offset by large falls in repairs.

"Construction output has remained broadly flat in the last year, both before and after the recent referendum."

The update comes after the latest PMI report said construction activity in October was buoyed by a ''solid'' rise in housebuilding work.

However, it warned that firms were being hit by Brexit uncertainty and soaring costs from the falling pound.

The UK economy defied expectations that growth would substantially slow in the third quarter, when the latest gross domestic product figures (GDP) were disclosed earlier this month.

The ONS said GDP grew by 0.5% in its first estimate of third-quarter growth, down slightly from 0.7% in the second quarter.

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