The UK's construction output has fallen on plummeting levels of new work


New work fell 7.8 per cent in the second quarter (Source: Getty)

The UK's construction output fell in the three months to the end of July after new work fell by the most in more than three years, figures published today showed.

Output in the sector contracted by 1.2 per cent in the quarter to July, revealed the Office for National Statistics (ONS) today, dropping 0.9 per cent between June and July. 

The fall was driven by a 7.8 per cent fall in new orders between April and June - the biggest fall since the first quarter of 2014.

Meanwhile, new housing fell 4.9 per cent, while all other work fell nine per cent. 

"[The month-on-month fall] was below all economists’ forecasts polled by Reuters," said Chris Williamson, chief business economist at IHS Markit.

"While the data suggest the weakened exchange rate may be helping the economy in terms of rebalancing towards exports and goods production, the rate of improvement remains modest. Slowdowns in services and construction are a concern and highlight subdued domestic demand and investment trends."

The figures backed up data published earlier this week by IHS Markit earlier this month, which showed growth in UK construction activity fell in August. Its purchasing managers' index fell to 51.1, which was above the 50 no-change mark, but below analysts' expectations of 52. 

"Muted economy activity and appreciable economic and political uncertainties threaten to remain a highly challenging combination for the construction sector over the coming months," said Howard Archer, chief economic adviser to the EY Item Club.

"There is the particular concern that potential clients will be cautious over committing to major projects if economic, political and Brexit uncertainties remain elevated over the coming months.

"Furthermore, there is the very real possibility that house building activity could be pressurised by extended lacklustre housing market activity and subdued prices amid weakened consumer fundamentals."

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