Britain’s builders have had a poor start to the final quarter of the year with an unexpected 2.2% drop in construction output in October.
Both new building work and repair and maintenance jobs declined, disappointing City expectations of a 0.7% increase after a 1.8% increase in construction output in September.
The poor performance dragged the growth rate for the year to October down to 0.7%, the lowest annual rate since May 2013 according to the Office for National Statistics.
Stefan Friedhoff, managing director for construction at Lloyds Bank commercial banking, said: “Much of the evidence – both in surveys and anecdotally – points towards a market that is cooling slightly as the year draws to a close, so this official data is unlikely to come as a total surprise.
“Construction companies are grappling with myriad issues, including inflation-led cost overruns, a competitive bidding environment and labour constraints. The shortage of skilled workers is undermining current output levels and, unchecked, it threatens the long-term health of the sector.”
There was some better news, after the ONS doubled its estimate of construction output growth for the third quarter to 1.6% from 0.8%. The better performance boosts gross domestic product over the period by 0.1 percentage point, suggesting the economy grew by 0.8% between July and September, and not 0.7% as previously thought.
Chris Williamson, chief economist at Markit, said: “The construction sector has grown faster than previously thought so far this year, and especially in the third quarter, adding further to signs of a booming economy.”
In the eurozone, the industrial sector provided the latest evidence of a sluggish economy. Industrial production grew by just 0.1% in October, half as fast as the 0.2% predicted by economists. It was a slowdown compared with 0.5% growth in September. Ireland had the strongest rate of monthly growth, at 9%, while industrial output shrank 0.9% in France and the Netherlands.
