A slowdown in commercial developments and house-building caused the fastest fall in UK construction output for five years in January, according to the Office for National Statistics.
Figures released on Friday show output fell 3.9 per cent in the first month of 2018, marking the biggest year-on-year decline since March 2013.
Monthly figures were no better and revealed a fall in output of 3.4 per cent between December and January. Economists had expected a monthly decline of just 0.5 per cent.
New orders also suffered with a fall of 25 per cent in the last three months of 2017.
Fastest decline since 2013: Figures released on Friday show construction output fell 3.9 per cent in the first month of 2018
‘Construction continues to be a weak spot in the UK economy with a big drop in commercial developments, along with a slowdown in house-building after its very strong end to last year,’ ONS senior statistician Ole Black said.
Investment in commercial developments, particularly in London, has fallen since the Brexit vote as higher construction costs and uncertainty has seen developers delay new schemes.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: ‘Commercial work will continue to fall if, as we expect, progress in Brexit talks remains slow.
‘We doubt that house-building will recover fully soon. The prospect of further increases in interest rates is subduing buyer demand both for new and existing homes.’
In sharp contrast however, ONS data also showed Britain’s industrial production had rebounded in January following a boost in manufacturing and North Sea oil and gas production.
Manufacturing grew 0.1 per cent in January month on month, the ninth consecutive month of growth for the first time since records began in 1968 as factories benefitted from strong global demand and a weak Brexit-hit pound.
‘We doubt that house-building will recover fully soon’: Construction output has floundered in the UK amid ongoing Brexit uncertainty
Industrial production grew 1.3 per cent in January, with growth driven mainly by the reopening of the Forties oil pipeline, which was shut down for three weeks after a crack was discovered in December.
Mining and quarrying provided the largest upward contribution, increasing by 23.5 per cent.
Figures also showed the UK trade deficit widen by £3.4 billion in goods and services to £8.7 billion, with the ONS citing rising oil prices making for more expensive fuel imports, which rocketed 21.4 per cent.
This contributed to a £3.2 billion widening of the trade in goods deficit.