UK construction output slips in June, economists see worse to come

People sun bathe at the Kings Cross pond in London, Britain, July 23, 2016. REUTERS/Paul Hackett

British construction output fell roughly as much as expected in June, according to official data, with little evidence that the European Union referendum that month had an impact on builders at the time.

The Office for National Statistics said construction output fell 0.9 percent in June compared with May, a slightly smaller drop than the 1.0 percent decline forecast in a Reuters poll of economists.

The figures are however likely to be viewed as ancient history by those trying to gauge how Britain’s economy reacted to the vote to leave the EU, given they include data from only a handful of days after the June 23 vote.

“There is very little anecdotal evidence at present to suggest that the referendum has had an impact on output,” the ONS said.

Sterling and British government bonds showed no reaction to the data.

For the second quarter as a whole, construction output — which accounts for about 6 percent of the economy — fell 0.7 percent, a steeper decline than 0.4 percent drop shown in preliminary economic growth data last month.

A survey from Markit/CIPS earlier this month suggested the construction industry suffered its sharpest downturn in seven years last month.

Most analysts expect the construction sector to fare badly in the fallout from the Brexit vote.

“It’s quite an investment-heavy sector and it’s one of the sectors we would expect to be held back by Brexit-type uncertainty,” said Chris Hare, economist at Investec.

“We think that uncertainty intensified rapidly after the Brexit vote so I think the outlook for construction sector is not looking too rosy for upcoming quarters.”

The figures also showed construction output fell 2.2 percent on the year, a smaller decrease than the 2.7 percent fall predicted in a Reuters poll of economists.

[Source:- Reuters]