Blow to economy as construction output falls 1.7%

THE UK economy failed to reach top gear in October, as the manufacturing sector expanded but the construction industry continued to slump.

Figures from the Office for National Statistics (ONS) showed construction output unexpectedly fell by 1.7 per cent on the month, as the industry was dragged down by a 1.5 per cent decline in new work.

The picture was also bleak for the threemonth period to October, with output dropping by 1.4 per cent following a 3 per cent slide in repair and maintenance work. However, contracts linked to the £56billion HS2 rail line ensured new orders leapt by 37 per cent between July and September, brightening the outlook for the sector.

In a contrast of fortunes, Britain’s buoyant manufacturing industry delivered another robust performance in October, expanding by 0.1 per cent as the wider industrial production came in flat. ONS statistician Kate Davies said: “While manufacturing was relatively subdued overall in October despite record production of cars destined for export, the longer-term picture is one of strong growth.”

Separate figures on UK imports and exports showed the total trade deficit widened by £300million to £1.4billion between September and October, as goods imports jumped 1.6 per cent.

Over three months to October, the trade deficit – excluding erratic commodities – expanded by £800million to £6.9billion, as goods imports rose by £3.3billion and good exports climbed by £1.4billion.

Howard Archer, EY Item Club’s chief economic adviser, said: “Mixed news on the UK economy at the start of the fourth quarter, with the positives coming from healthy underlying manufacturing output and stronger exports in October but another sharp drop in construction output being a serious negative.

“The trade deficit widened modestly in October but decent export growth raised hopes that a competitive pound and healthy global growth could be having more of a positive impact.”

‘The longer-term picture is one of strong growth’