The UK construction industry ended 2017 with its most sustained fall in quarterly output for more than five years, as businesses’ reluctance to commit to new projects more than offset record levels of housebuilding.
Output in the three months to December fell by 0.7 per cent, the third consecutive quarter of declines and the longest period of such declines since the third quarter of 2012. The decline came despite a significantly better than expected monthly performance in December, with an 1.6 per cent jump confounding forecasts of zero growth.
The unexpected lift limited the year on year decline to 0.2 per cent - better than the 1.6 per cent contraction economists had expected, though still only the second year on year decline since 2013. The value of private housing construction over the quarter increased by £403m, taking the value of priate housing work to its highest level on record, according to the ONS.
The country’s chronic housing shortage and government incentives such as help to buy have kept the market for new builds relatively healthy despite rising economic uncertainty. However, the shaky outlook has hurt the wider sector, which accounts for around 7 per cent of economic output.
There was a particularly sharp decline in new commercial property projects, while industrial work and renovation and maintenance also declined.
Ole Black, ONS senior statistician, said “house building and infrastructure were hte only bright spots with all other areas of the industry falling back throughout the year”. Recent surveys suggest the picture is unlikely imminently to improve, with IHS Markit’s latest assessment of the construction sector missing forecasts last week.
Source: Financial Times
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