Construction sector figures show fresh decline

The construction industry continued to decline in June, raising fears that the British economy is on course for sharp slowdown in the wake of the EU referendum result.

Construction output shrank 0.9% in June, the ONS said. Picture: Christopher Furlong/Getty Images

The Office for National Statistics (ONS) said construction output declined by 0.9 per cent in the month of the Brexit vote, although that compared to a 2.1 per cent fall in May and economists’ expectations of a 1.9 per cent contraction.

Output was also down 0.7 per cent for the second quarter compared with the first three months of the year, and was 1.4 per cent lower in contrast to the same month in 2015.

The decline comes as the latest Markit/Cips construction purchasing managers’ index (PMI) showed the construction sector last month recorded its fastest fall since June 2009, with a reading of 45.9 for July, down slightly from 46 in June but above economists’ expectations of 44.

Allan Callaghan, managing director of Cruden Building & Renewals, said: “While these figures will cause disappointment throughout the Scottish construction sector, they will come as no surprise to those on the ground.

“They do however follow welcome news this week with the Scottish Government’s attempt to stimulate the economy by making an additional £100 million available for infrastructure projects.”

Ed Monaghan, chair of Construction Scotland’s industry leadership group, said the extra investment “will go some way to building confidence given recent uncertainty in the marketplace”.

Monaghan added: “To maintain this momentum, Construction Scotland firmly believes that the industry needs certainty, and clear line of sight of such strategic investments over the coming years.”

The ONS said the decline in the three months to June was driven by a 0.8 per cent drop in all new work, while repair and maintenance was also 0.5 per cent lower.

It added that the second-quarter fall was revised to 0.7 per cent from its initial estimate of 0.4 per cent made at the end of July, but this change did not affect its estimate for gross domestic product (GDP) for the period.

GDP grew by 0.6 per cent for the second quarter, up from 0.4 per cent in the first three months of 2016, thanks to the strongest performance from industrial production since 1999.