UK construction industry ‘enters recession’
Figures suggest the building sector is “in the doldrums”.
The UK construction industry has technically entered recession for the first time in five years.
Output fell by 0.9% in July-September, according to new figures from the Office for National Statistics (ONS).
The drop follows a decrease of 0.5% in April-June, meaning the industry has seen its first back-to-back quarterly fall in output since 2012.
The figures suggest the UK’s building sector is “in the doldrums”, according to one leading economist.
A decline in housing repair and maintenance together with less private commercial new work are behind the fall, the ONS said.
The trend is in stark contrast with the overall performance of the UK’s industrial sector, which has recorded its sixth straight month of growth for the first time in 23 years.
Chris Williamson, IHS Markit’s chief business economist, said: “While manufacturing is enjoying strong growth, construction is in the doldrums, entering a new technical recession.
“As seen in the recent PMI survey data, the commercial construction sector suffered the largest drop in output, highlighting how businesses appear to be pulling back on investing in new offices, factories and retail space.”
The fall in construction output of 0.9% is the biggest for a quarter since a drop of 1.6% was recorded in July-September 2012.
This followed even bigger falls of 3.2% in the first quarter of 2012 and 4.0% in the second.
The latest figures show that overall construction output sank by £361 million in July-September.
This was largely due to a £236 million decrease in private commercial new work and a £165 million fall in total housing repair and maintenance.
By contrast, new public housing contributed £65 million to output, while £138 million of growth came from new private housing.
Mr Williamson added the economy has enjoyed a strong start to the fourth quarter, led by growth in both manufacturing and the service sector.
“Construction continued to struggle, however, hampered in particular by sluggish demand for commercial building,” he said.