UK construction slips back in May

Construction output fell by 1.1% in May according to official figures published today, capping a week of troubling news for the UK’s economic recovery.

Private commercial work fell by 3.6% in the month, while private-housing construction, which has led the recovery of the building sector over the past year, flatlined.

“There is now a very serious risk that construction output contracted overall in the second quarter,” said Howard Archer of IHS Global Insight.

Earlier this week the Office for National Statistics reported that manufacturing declined by a shock 1.3% in May, the biggest monthly fall in 16 months, while the goods trade deficit shot up to £9.2 billion on the back of weak export growth. The sequence of data is a blow to the Coalition’s hopes of rebalancing the recovery away from consumer spending and towards business investment, manufacturing exports and construction.

On a three-monthly basis total output fell by 0.8%, the largest drop registered since the three months to October 2012. The official figures are at odds with closely watched surveys of the construction sector, which pointed to the fastest pace of growth for four months in June.

However, today’s figures also showed that on an annual basis construction output is 3.5% higher than last year. Private-house building is up 16.8% on May 2013.

Housing-construction firms have reported a boost from the Coalition’s Help to Buy mortgage subsidies.