Drop in housing output leads construction into reverse in August

Private new housing output dropped a further 1.4% in August, making it one of the main contributors to a fall in construction output in the month, according to the latest Office for National Statistics (ONS) figures.

The seasonally adjusted drop, which comes after a steady decline over the last year since private housebuilding activity peaked last August, means output of private housing was 15% lower this August than the same month a year ago.

The figures contributed to construction output as a whole dropping for the second successive month. 

The ONS said heavy rainfall and lower-than-average temperatures had resulted in delays to planned working, resulting in a 0.5% fall in seasonally adjusted construction output across the month. 

This came after a 0.4% decrease in July, figures for that month having been revised up from the previously estimated fall of 0.5%. 

The decline was driven by a 1.5% fall in new work, with repair and maintenance up 1% on the month.  

Five of nine construction sectors recorded by the ONS saw a month-on-month decrease, with private commercial (4.1%) and private housing (1.4%) experiencing the most severe declines within the new work category. 

By contrast, the broader UK economy experienced a modest return to growth, with a 0.2% rise. 

Clive Docwra, managing director of property and construction consultancy McBains, said the continued decline within construction came as “little surprise” given high interest rates and caution among investors, particularly in the housebuilding sector. 

“Longer-term, the scaling back of HS2 is also likely to have a knock-on effect in terms of new commercial and infrastructure contracts further down supply chains, so the outlook is now increasingly uncertain in other work sectors too,” he said. 

Despite the recent contraction, construction grew overall by 0.9% in the three months to August, with equivalent rises in both new work and repair and maintenance.