UK construction at weakest level for four years

Bricks building housing construction

UK construction output is at its weakest level for four years, official figures show.

New data from the ONS reveals that construction output contracted by 1.1 per cent in the third quarter, reflecting the three months following the Brexit vote, although month-on-month it was 0.3 per cent higher in September.

It was weakest performance since the third quarter of 2012.

IHS Global Insight chief UK and European economist Howard Archer says that by contracting 1.1 per cent quarter-on-quarter in the third quarter after a dip of 0.1 per cent in the second quarter, the sector “is effectively in recession.”

The main weakness in construction output in the third quarter came in repair and maintenance work. New work rose 1.2 per cent month-on-month in September and actually edged up 0.3 per cent quarter-on-quarter in the third quarter.

Archer says: “The possibilities that the economy will slow appreciably over the coming months despite its current resilience and an uncertain outlook for the housing market are also concerns for the construction sector.

“Additionally, construction companies’ input costs are being pushed markedly higher by a sharply weakened pound.

“A substantial amount of building components and materials are imported.

He adds: “The construction sector will take some heart from Chancellor Phillip Hammond prioritising infrastructure and housing initiatives in his fiscal efforts to support the economy in the Autumn Statement on 23 November.

“Additional measures are set to be announced in the Autumn Statement, while the Chancellor has already indicated that an additional £2bn will be earmarked to tackle the housing shortage on top of a £3bn house building fund that has already been targeted at small and medium-sized developers, offering cheap loans or financial guarantees.”