UK construction output slumps in May

Construction output in the UK slumped in May ahead of the EU referendum, according to the latest figures from the Office for National Statistics.

Output fell by 2.1% in May from April, which was much steeper than the 1% decline expected by economists. Construction output had risen by 2.8% in April.

The largest contribution to the May slide came from new private housing, while infrastructure was the only sector to show an increase in output, up 0.6%.

On the year, output was down 1.9% versus expectations for a 3.5% drop.

The ONS said: “The fall in May 2016, taken together with the strength of April’s figures, continues a longer trend of broadly flat output growth since the start of 2015, in contrast to the strength in output growth seen between the second half of 2013 to the end of 2014.

“Looking over an annual period – between May 2015 and May 2016 – construction output fell by 1.8%. Output in Quarter 1 (Jan to Mar) 2016 also remains 1.4% below levels seen in Quarter 1 (Jan to Mar) 2008, just before the economic downturn.”

Chris Williamson, chief economist at Markit, said: “A drop in UK construction output in May adds to what’s looking like an ugly run of data for the sector

“Going forward, prospects look worse, for the short term at least. The drop in activity seen in the June construction PMI was fuelled by uncertainty about the mere possibility off ‘Brexit’. The reality of the UK leaving the EU and the associated heightened uncertainty, especially in relation to commercial property and housing investment, is therefore likely to cause further stress in coming months.”.