Construction industry still struggling for momentum

Jake Cordell
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The government is set to launch a big infrastructure drive (Source: Getty)

British builders downed tools over the summer, as construction output missed economists' expectations in the wake of the EU referendum.

Activity in the sector, which accounts for around six per cent of the UK economy, dropped by 1.5 per cent between July and August, the Office for National Statistics (ONS) confirmed this morning.

The fall between the two months in not surprising given August is typically a quieter period for most bits of the UK economy. However, the industry managed to grow by only 0.2 per cent over the year, the ONS said, falling short of the 1.5 per cent pencilled in by forecasters.

Samuel Tombs of Panetheon Macroeconomics said: "Barring a surge in September, [the] construction sector relapsed into recession in the third quarter."

Private housebuilding bucked the trend, jumping by 9.4 per cent over the last 12 months, although most other bits of the industry such as public sector housebuilding and repair and maintenance work eased back.

Infrastructure projects also plunged, with the money being poured into roads, railways and the like, falling by 5.1 per cent over the month and down nearly one-tenth over the year.

Chancellor Phillip Hammond is expected to announce a new state-backed infrastructure drive in his first Autumn Statement at the end of November. The government has also signalled it will make a long-awaited decision over airport expansion in the coming days.

Construction has been a closely-watched piece of the post-referendum puzzle, as economists had expected the industry to be a bellwether for any future economic trouble.

Howard Archer of IHS Markit said: "There are still major uncertainties for the sector going forward – particularly regarding clients willingness to commit to major projects, especially in the commercial real estate sector."

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