The UK's construction sector has contracted again, no thanks to HS2

Emma Haslett
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Building Development Along The Thames In East London
Construction in the UK is looking less positive. (Source: Getty)

The construction sector has contracted again, falling 1.7 per cent between September and October, according to official data.

The Office for National Statistics said output in the sector had fallen 1.4 per cent in the three months to October compared with the quarter before, the sixth three-month period in which it has fallen.

The drop was driven by a three per cent fall in repair and maintenance and a 0.6 per cent fall in all new work.

But there was one ray of light: in the third quarter of the year, new orders grew by a record 37.4 per cent, although the ONS said that was largely thanks to several high-value new contracts relating to the government's HS2 rail project.

The outlook for the sector is unlikely to brighten: IHS Markit's closely-watched purchasing managers' index, published earlier this week, barely crept back into positive territory in November, having shown a contraction in October.

Housebuilding, which has been heavily boosted by the government, was the only driver of growth, Tim Moor, associate director at IHS Markit, admitted.

"Sustained declines in civil engineering and commercial activity meant that large areas of the building industry have become stuck in a rut."

Today Samuel Tombs, chief UK economist at Panthon Macroeconomics, voiced concern.

"Brexit uncertainty will continue to hit commercial projects, while a planned 4.5 per cent decline in public sector investment next year will additionally dampen the sector," he said.

Read more: Construction firms facing growing delays for payments

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