UK growth threat as construction sector output falls for the first time since May 2013

 
Emma Haslett
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The figures showed the first fall in construction since May 2013 (Source: Getty)

Output in the UK construction industry fell unexpectedly in August - its first fall since May 2013.

Figures by the Office for National Statistics published this morning showed construction fell 4.3 per cent in August compared with the month before, and 1.3 per cent compared with the same month in 2013.

The news came as a shock to economists: the sector has been one of the UK's strongest in recent years, shoring up economic growth.

The figures showed new work fell 3.6 per cent on the month before, while repair and maintenance fell 5.6 per cent over the same period.

Howard Archer, chief UK and European economist at IHS Global Insight, called the figures "seriously bad news" for third quarter GDP growth prospects.

"Even allowing for construction output being held back in August by particularly bad weather and the fact that output is notoriously volatile from month to month, a drop of 4.3 per cent month-on-month was a particularly poor performance, especially as it followed a drop of one per cent in July.

"Construction output will need to have grown 8.2 per cent month-on-month in September to have just been flat quarter-on-quarter in the third quarter. This seems highly improbable even if better weather in September should have helped a sizeable rebound in output to occur and survey evidence for the month from the purchasing managers was strong."

The pound dropped against the dollar on the news, falling as low as $1.52.

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