Construction falters and UK exporters under cosh

Construction output slid 3.9 per cent on the month. Picture: AP

Construction output slid 3.9 per cent on the month. Picture: AP

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British construction fell sharply in August as it was hit by a fall in house-building, adding to signs of a slowdown in the wider economy, official data showed yesterday.

Separate figures showed Britain’s goods trade deficit narrowed in August, but only because imports fell more sharply – 6.2 per cent – than a 2.3 per cent slide in exports.

It comes against the backcloth of mounting fears that the eurozone might slide back into recession, while UK exporters are also hampered by sterling being 8 per cent stronger against the euro than a year ago.

Construction output slid 3.9 per cent on the month and fell year-on-year for the first time since May 2013, by 0.3 per cent, the Office for National Statistics (ONS) said.

The biggest drag on the August headline figure came from a fall in house-building which was down 5.5 per cent from July.

Infrastructure and commercial building also fell. Data earlier this week showed industrial production was flat in August compared with July, suggesting that the pace of Britain’s economic recovery has slowed in the third quarter from growth of 0.9 per cent in Q2.

Yesterday’s figures contrast with a Markit purchasing managers’ survey last week that showed UK construction grew at one of the fastest rates on record in September.

“Whether we trust the numbers or not, it is what it is and this will affect GDP,” Alan Clarke, an economist with Scotiabank, said. “Depending on the scale of the bounce next month, this could subtract around 0.1 percentage point from overall GDP growth.”

However, optimistic voices remain in the construction industry. Brian McQuade, MD of Kier Construction’s Scotland and north-east England business, said: “We believe that there is still every reason to be positive about the future of the Scottish construction industry. The statistics do not reflect the trends that we are experiencing.”.

Ed Monaghan, chair of Construction Scotland, said: “It is disappointing that the figures released by ONS show a slight dip compared to recent months.

“However, I don’t believe that those within the construction industry in Scotland should be concerned. It is my belief that the future remains bright.”

Other ONS data suggested that eurozone woes and the strong pound continued to hurt UK exporters. The UK’s trade deficit in goods and services narrowed to £1.9 billion in August, down from £3.1bn in July and the lowest since March.

Goods exports fell £700 million, or 2.8 per cent, to £23.2bn in the month, with the figure on a three-month basis the largest decline since March.

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