Slowdown fears grow after construction contracts in August

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British construction fell sharply in August, hit by a fall in house-building and adding to signs of a slowdown in other areas of the economy, official figures showed yesterday.

Separate data showed Britain’s goods trade deficit narrowed in August but only because imports fell more sharply than exports.

Construction output slid 3.9 per cent on the month and fell year-on-year for the first time since May 2013, by 0.3 per cent, the Office for National Statistics said.

It revised July output to a 1.9 per cent rise on the month, from an original estimate of no change.

The biggest drag on the August headline figure came from a fall in house-building which was down 5.5 per cent from July. Infrastructure and commercial building also fell.

Data earlier this week showed industrial production was flat in August compared with July, adding to signs that the pace of Britain’s economic recovery may have slowed in the third quarter from growth of 0.9 percent in the second quarter.

Yesterday’s figures contrast with a Markit purchasing managers’ survey last week which showed that the construction sector grew at one of the fastest rates on record in September.

“Whether we trust the numbers or not, it is what it is and this will affect GDP,” said Alan Clarke, an economist with Scotiabank in London. “Depending on the scale of the bounce next month, this could subtract around 0.1 percentage point from overall GDP growth.”

Britain’s deficit in its trade in goods narrowed in August to £9.099bn from a revised £10.414bn in July, which was the biggest on record.

August’s deficit was the narrowest since April, the ONS also said.

Including Britain’s surplus in its trade in services, the overall trade deficit narrowed to £1.917bn from £3.079bn in July, according to the data.