Number of homes being built declines

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The amount of new housing built in Britain fell for the first time in more than two years in July, despite rising house prices, driving a broader decline in construction that adds to signs that the country’s economy is slowing.

The official figures on Friday contrast with bumper profits reported by housebuilders and follow weak manufacturing figures which have raised questions about whether growth is cooling as the Bank of England comes nearer to raising interest rates.

Housebuilding in July was 2.5 per cent lower than a year earlier, the first fall since March 2013, and the slowdown looks set to continue with the volume of orders for new housing at its lowest since early 2013.

Private commercial work, such as building shops and offices, also fell, and overall construction output in July was down by 0.7 per cent on the year, the first fall since May 2013 and bucking economists’ expectations for a 0.6 per cent rise.

“This indicator continues the theme of disappointing data for Q3,” said Alan Clarke, head of European fixed income strategy at Scotiabank.

Britain’s economy has been growing rapidly over the past couple of years, chalking up an above-average 0.7 per cent expansion in the three months to June, but most economists expect a modest slowdown in the third quarter of 2015.