Building drop knocks growth

THE sharpest decline in construction output for more than three years in March dealt another hammer blow to Britain’s growth prospects.

Figures from the Office for National Statistics showed the sector contracted by 3.6 per cent from the previous month, its biggest decline since December 2012.

It was the third straight month-onmonth fall – the first such losing streak since the monthly series started in 2010 – while the 1.9 per cent drop from January to March compared with the same 2015 period represents the first year-on-year decrease for three years.

Output fell by 1.1 per cent in the first quarter from the previous three months, worse than an initial estimate of a 0.9 per cent drop.

The construction sector, which generates about 6 per cent of GDP, was squeezed by both a 0.6 per cent drop in new work and a 1.9 per cent decrease in repair and maintenance.

Housebuilding provided the one bright spot, with the Government’s prioritising of new homes helping to drive quarteron-quarter growth. But there were sharp falls in infrastructure, public work and private industrial, amid concerns that some projects have been put on hold due to uncertainty over the EU referendum.

The gloomy data follows figures earlier this week showing first-quarter factory output falling at the fastest annual rate in nearly three years in March.

Ruth Miller, UK economist at Capital Economics, said the UK’s GDP growth was “precariously unbalanced” and that recent evidence pointed to continuing weakness in the near term.

She said: “The March performance was particularly dire. Skilled labour shortages are biting and anecdotal evidence suggests that weaker global growth and Brexit uncertainty may be taking a toll.” Howard Archer, chief UK economist at IHS Global Insight, added: “It is notable that the purchasing managers indicated that clients are unwilling to commit to new contracts or expand existing work.

“The Bank of England’s monetary policy committee has observed that commercial property transactions have slowed amid increased uncertainty.”