UK construction output falls for fourth month

UK construction output fell for the fourth month in a row, with residential housebuilding declining after a strong couple of months.

UK construction output fell 0.9% in July on a seasonally adjusted basis, worse than the 0.2% consensus estimate and worse than the previous month's 0.1% decline.

This meant construction activity was down 0.4% year on year, a slight easing from the 0.9% annual drop seen a month earlier but worse than the 0.2% forecast by economists.

The disappointment on construction was in contrast to better news from manufacturers, where output rose more than expected.

“Further manufacturing growth is expected in August, given the solid survey data, but the manufacturing upturn needs to be looked at in the wider context of sluggish exports, declining construction activity and consumers being squeezed by low wages and rising prices," said economist Chris Williamson at IHS Markit.

He said that while the data suggest the weakened exchange rate may be helping the economy in terms of rebalancing towards exports and goods production, the rate of improvement remains modest. "Slowdowns in services and construction are a concern and highlight subdued domestic demand and investment trends."