UK construction output fell 3.4% in January 2018 compared to December 2017, the largest monthly decline since June 2012, according to the Office for National Statistics (ONS).
The ONS said that weak growth in the housebuilding sector was the main factor in the low output and that construction remained a ‘weak spot’ for the UK economy. ONS data also showed that manufacturing growth slowed in January and the trade deficit increased.
Construction saw a decline in all new work in January, with the biggest drop in the private housing sector. However, that sector had experienced a record high in December 2017.
Ole Black, senior statistician at ONS said: “Construction continues to be a weak spot in the UK economy with a big drop in commercial developments, along with a slowdown in housebuilding after its very strong end to last year.”
PM Theresa May recently unveiled reforms aimed at boosting housebuilding in England. However, rising interest rates and the uncertainty over the shape Brexit will take are contributing to a sluggish construction sector.
Samuel Tombs, chief UK economist at Pantheon Macroneconomics told BBC News: “The sharp decline in output in January primarily reflected an 8.3% month-to-month collapse in new work in the private housing sector.”
Tombs added that anticipation of further interest rate rises was hampering buyer demand for new homes.