UK construction output slips surprisingly sharply

UK construction output surprisingly slipped 0.2% in January compared with December, data from the Office for National Statistics showed on Friday, well short of analysts' forecasts for a 0.3% rise.

Growth of 0.8% in repairs and maintenance was offset by an 0.8% fall in new work, the ONS said.

Within the new work category, decreases of 10.6% in public new housing and 8.6% in infrastructure was offset by increases of 4.7% in private commercial, 1.6% in public other new work, 0.7% in private industrial and 0.6% in private new housing.

Disappointing construction data will be balanced against the ONS's improved industrial production numbers published earlier in the week.

The statistics office also pointed out that the second estimate of gross domestic product (GDP) for the fourth quarter had been revised the decrease from a 0.4% decrease upwards by 0.7 percentage points to an increase of 0.3%.

“The UK construction sector suffered a disappointing start to the year, adding to a downbeat flow of data on the health of the economy so far this year," said economist Chris Williamson of Markit.

"The data follow survey evidence showing growth slowing sharply in February amid heightened uncertainty about the economic outlook."

He said the industrial upturn ONS revealed earlier in the week may prove short-lived, as manufacturing PMI fell steeply in February to hit a seven-month low, with a construction revival also looking unlikely after its own PMI slumped to a 32-month low in February due to the slowdown in housebuilding activity.