Construction output fell more than expected in May, adding to concerns that the economy is in line for a sharp slowdown following the vote to quit the European Union.
Output contracted 2.1 per cent compared to April and 1.9 per cent year-on-year, according to figures from the Office for National Statistics (ONS).
The disappointing numbers came in below economists’ forecasts and follow last month’s Markit/Cips PMI survey, which also showed a contraction in activity.
The data provides further evidence that projects were put on hold in the lead-up to the EU referendum, with experts forecasting worse to come.
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. However, it looks like there’s worse to come, possibly much worse.
“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.”
Commercial property is bearing the brunt of Brexit fallout as investors scramble to cash out following the Brexit vote.
Last week, Henderson Global Investors, Canada Life and Threadneedle joined M&G Investments, Aviva and Standard Life Investments in halting trading in their property funds.
On Wednesday, Aberdeen Asset Management lifted a week-long suspension from trading in its property fund.
Commenting on today’s ONS data, Cruden Building & Renewals managing director Allan Callaghan said: “While disappointing, we must remember these figures came during a time where the UK had faced a continued period of political and wider economic uncertainty.
“With last month’s decision to leave the EU ending months of speculation, now is the time to take stock of the situation and review what it will mean for the construction and housebuilding sectors over the coming months.”
He added: “I am confident that Scotland’s housebuilding industry has the skills and forward thinking approach to continue its vital support of the wider economy.”