Britain’s construction output just dropped for the 4th consecutive month

A builder working for Taylor Wimpey builds a roof on an estate in Aylesbury, Britain, February 7, 2017.REUTERS/Eddie Keogh

• Construction output slips 0.9% in July, marking a fourth month of consecutive declines.
• Sector is edging towards a second recession in a year.
• Manufacturing production beats expectations, growing 0.5% in the month of July.

LONDON – Output in the UK’s construction sector fell for a fourth consecutive month, signalling further trouble for the already stricken sector, according to data released by the Office for National Statistics on Friday.

Construction output fell by 0.9% in the month of July, while falling 1.2% on a three month to three month basis, a measure which removes some of the volatility of monthly numbers.

“Both the month-on-month and 3 month on 3 month series fell for the fourth consecutive month in July 2017,” the ONS said in a release, while noting that output “remains at relatively high levels.”

The chart below shows the UK’s construction sector’s longer term trend:

Office for National Statistics

The ONS’ data comes in the same week that a Purchasing Managers’ Index survey from IHS Markit showed that the sector is creeping towards what would be its second recession in less than a year.

IHS Markit and CIPS’ latest PMI release for the construction sector — which measures expectations of growth — came in at 51.1 for the month of August.

That was down from an already weak reading of 51.9 in July, and also below the 52 reading expected by economists polled prior to the release.

“August survey data indicated that the UK construction sector continued to experience a slowdown this summer,” a release said.

“Reduced levels of commercial work were a key source of weakness, which offset robust growth in residential building.

Industrial production meets expectations

Alongside data from the construction sector, the ONS also released data for the manufacturing sector, as well as industrial production data.

Industrial production came in in line with forecasts made before the release, with the sector growing 0.4% on a year-on-year basis in July, and 0.2% on a monthly basis.

Manufacturing beat expectations solidly, growing 0.5% in the month, compared to forecasts of 0.3%, and 1.9% on a year-to-year basis, up from the 1.7% predicted. Manufacturing did however shrink by 0.1% over the three month period measured by the ONS.

“Manufacturing remains relatively subdued since the start of the year, though July showed the first significant monthly growth of 2017, with car production increasing partly thanks to new models rolling off the production lines,” Kate Davies, a senior ONS statistician said.

“The usual period of summer maintenance of North Sea oil platforms also failed to materialise for a second month running.”