-UK Aug Construction Output Down 11.6% y/y; Jun-Aug Ouput Down 11.9% y/y
LONDON (MNI) – UK construction output in August fell sharply on the
year, continuing a run of dismal construction data.
Non-seasonally adjusted construction output in August was down
11.6% on the year and down 11.9% in the three months through August on a
year ago. The official construction data have tended to be more
volatile, and to show much larger falls, than private sector survey data
and the Bank of England treats the data with caution.
The headline figure in the August CIPS construction survey came in
at 49.8, only a sliver below the 50 no-change reading.
The BOE Monetary Policy Committee has tended to focus on underlying
GDP measures that exclude construction.
The BOE’s August Inflation Report provided detailed analysis of the
official construction data. It suggested the data may have overestimated
growth in construction back in 2010, contribuing base effects which have
exaggerated subsequent declines.
The BOE noted that construction sector output was estimated to have
shrunk by almost 10% over the first and second quarters of this year,
knocking 0.4 percentage points off GDP in each quarter.
While some of this may have been due to one-off factors, such as
the Diamond Jubilee, the BOE said even taking these factors into
account, “the size of the fall in output was surprising, and much
greater than suggested by survey indicators of construction output
growth.”
“The ONS data may provide a reasonable reflection of the
current level of construction output. That is because the rises in
output recorded in 2010 also appear surprisingly large,” the BOE added.
The BOE said that the picture of weakness at present in the
construction sector was plausible in part due to cuts in government
investement and the waning effect of Olympic-related construction
projects.
–London newsroom: 4420 7862 7491 email: drobinson@marketnews.com
[TOPICS: M$B$$$,MABDS$]
