ONS: Construction suffers weakest third quarter in four years

The UK construction industry suffered its worst showing in four years in this year’s third quarter according to the latest figures from the Office of National Statistics.

The three months from July to September – the first three months following the EU referendum – saw output fall by 1.1% from the previous three months.

Repair and maintenance fell by 3.6%, only partially offset by a rise on all new work of 0.3%.

Compared to the same period last year, output had increased by 0.1%. There was also increase in new work by 2.0%, while repair and maintenance saw a decrease of 3.4%.

The report also had bad news for the government with the news that the construction of new homes has stalled.

Despite the disappointing figures, the decrease wasn’t as bad as originally forecast by the ONS last month when it predicted construction output would drop 1.4%.

The year on year figures show that output increased by 0.2% in September in comparison with the same period last year.

ONS statistician Kate Davies commented: “Construction output has remained broadly flat in the last year, both before and after the recent referendum.”

The figures saw construction output rise by 0.3% in comparison with August, with an increase in new work of 1.2%.

Figures from the Markit/CIPS UK Construction PMI figures released last week showed growth in the last two months suggesting that the sector had begun to stabilise following the Brexit vote.

Rebecca Larkin, Senior Economist at the Construction Products Association, commented on the figures:  “Whilst today’s figures show a contraction in construction output, surveys across the industry have painted a more positive picture of continued increases in construction activity during the quarter. This suggests that official data are likely to be revised up further as more data becomes available.  Certainly, the ONS data show that new construction work remains the primary driver of activity, rising by 0.3% during the quarter. In contrast, repair and maintenance work was reported to have fallen by 3.6%.

“Despite the contraction in Q3, the rise in new orders in Q2, along with broadly positive expectations expressed in industry surveys, points to a favourable performance over the rest of the year. For the year to date, overall construction output remains 0.6% higher than a year ago.”

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