UK construction sector grinds to a halt in February

Output in Britain's construction sector ground to a halt in February, largely due to a slump in infrastructure work, data released on Friday (6 April) by the Office for National Statistics (ONS) showed.

Output in the industry fell 1.7% month-on-month in February, compared with analysts' expectations for a 0.1% gain. Meanwhile, the drop recorded in the previous month was revised upward to show no growth.

On a year-on-year basis, the construction sector saw output grow 0.5%, compared with analysts' forecast for a 1.9% increase and a 2.3% increase recorded in January.

The ONS added infrastructure work provided one of the main downward pressures on output in February, decreasing by 7.3% in the month, while new housing also contributed to the monthly decrease, falling 2.6% month-on-month.

There was more positive news from the repair and maintenance sub-sector, which grew 1.2% and 0.8% on a monthly and annual basis respectively.

Howard Archer, chief UK and European economist at IHS Markit, warned there were clouds in the outlook for the construction sector.

"The strong likelihood that the economy will slow appreciably as 2017 progresses and a lacklustre housing market are serious concerns for the construction sector," he said.

"There is also evidence that some clients are reluctant to commit to major projects in an uncertain environment. Additionally, construction companies' input costs are being pushed markedly higher by a sharply weakened pound. A substantial amount of building components and materials are imported."

A report released earlier this week showed the closely watched Markit/CIPS Construction Purchasing Managers' Index (PMI) fell to 52.2 last month from 52.5 in February.

Economists had expected the figure to hold steady at 52.5, the rate was also the joint slowest rate of growth since a recent pick-up for the sector began in September following last summer's Brexit vote.