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Construction output down for second month in row amid 'caution' ahead of EU vote

Published 15/04/2016

Construction in Britain was down in February
Construction in Britain was down in February

Construction in Britain fell for the second month in a row in February, in a further sign that firms are slowing spending ahead of the country's Brexit vote.

The Office for National Statistics (ONS) said output fell 0.3% compared to the month before, due to falls in the amount of new work being carried out and repair and maintenance activity.

It said all new work dipped by 0.2% in February, while total maintenance activity fell by 0.5% in the period.

The ONS also revised down the overall sector's performance in January to show a decline of 0.4%, down from a previous estimate of a 0.2% fall.

Earlier this week the Bank of England's Monetary Policy Committee (MPC) said uncertainty relating to the EU referendum has "begun to weigh on certain areas" such as "capital expenditure and commercial property transactions".

The MPC held interest rates at 0.5% - where they have remained since March 2009.

In a bright spot in the data the ONS said that housebuilding had risen by 6.7% over the three months to February, in a sector that has been boosted by the Government's Help to Buy scheme.

The data contrasts with the closely-watched Markit/CIPS construction purchasing managers' index last week, which said housebuilding activity grew at its slowest pace for more than three years.

The ONS added that over the three months to February as a whole, construction output rose 1.5% compared with the previous three months, its fastest growth rate since March 2015.

Construction output, which makes up 6% of the economy, was 0.3% higher than a year ago, the ONS said.

However, a number of economists said the country's Brexit vote on June 23, is weighing on the economy.

Howard Archer, chief UK and European economist at IHS Global Insight, said: "The construction sector is seemingly currently being affected by increased caution among clients - especially for major projects - amid heightened UK economic uncertainties that are being magnified as June's EU referendum looms."

Samuel Tombs, chief UK economist of Pantheon Macroeconomics, added: "The latest construction figures provide more evidence that concerns about the EU referendum are sapping the recovery of its momentum."

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