UK construction output drops in July

UK construction output fell in the run-up to the UK’s vote to leave the European Union, according to data released by the Office for National Statistics.

Construction output fell 0.9% in June from May, more or less in line with consensus expectations for a 1% drop.

Compared to June 2015, construction output was down 2.2%, which was a touch steeper than the 2.1% drop forecast by economists and worse than the 1.6% decline the month before.

In the quarter, output was estimated to have decreased by 0.7% compared with the first quarter.

Pantheon Macroeconomics said: “June’s official data confirm that the construction sector re-entered recession in the first half of this year, as public sector cuts and Brexit risk took their toll.

“The downturn looks set to deepen in Q3; July’s construction PMI broadly is consistent with output falling by about 3.5% quarter-on-quarter. Meanwhile, Brexit negotiations will be protracted, so businesses will hold off committing to major capital expenditure for a long time to come.”