UK construction output falls to lowest levels since 2012: ONS
UK construction output fell 2.7 per cent in March, the biggest decline since August 2012, according to the Office for National Statistics.
The three-month on three-month decline in the sector was driven by falls in both repair and maintenance, and new work, which fell 2.8 per cent and 2.6 per cent respectively, the ONS said.
Anecdotally, the blame was put on bad weather – with the Beast from the East and Storm Emma both playing a role – although the ONS said this was based on a “small number” of responses and therefore it was difficult to quantify the exact impact on the industry.
It also comes as the Royal Institute of Chartered Surveyors (Rics) warns that London house prices had suffered their worst performance in nearly a decade.
Following several months of consistently strong growth, private housing also experienced a slowdown in March 2018, contracting in the three-month on three-month series by 1.6 per cent.
Construction output also fell in the month-on-month series, dropping by 2.3 per cent.
Blane Perrotton, managing director of the national property consultancy and surveyors Naismiths, said: “Housebuilding was more than just the one bright spot against the increasingly dark backdrop – it had taken on a totemic importance as a beacon of demand, resilience and hope. Without it, the sector looks dangerously exposed. Not for nothing is construction is now suffering the highest number of new insolvencies of any industry.
“The slump in output is the worst for six years, as the industry has been hit for six by a toxic combination of weak confidence, softening investor demand and rising input costs. Despite the low interest rate environment and abundance of finance available, developers are increasingly doubling down – concentrating on completing existing projects rather than commissioning new ones.
“At this rate there is likely to be more pain to come, as there is little sign of an end to the limbo which is prompting investors in London and the southeast to sit on their hands.”
Howard Archer, chief economic adviser at EY Item Club, agreed there was more to the data than bad weather.
“The nagging suspicion is that not all of March’s weakness in the data can be blamed on the Beast from the East,” he said. “The Office for National Statistics itself observed that the economy was very sluggish in the first quarter with little impact overall from the bad weather. While the ONS comment may underplay the weather impact, there is undeniably good reason to be concerned about the economy’s underlying performance in the first quarter.”
Suren Thiru, head of economics at the British Chambers of Commerce (BCC), added: “Despite the narrowing in the UK’s trade deficit in the first quarter, with the construction sector in recession and manufacturing output slowing, this is further confirmation that the UK’s economic performance in the opening months of 2018 has been underwhelming.”