UK’s Construction Output Falls Post-Brexit

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British construction output unexpectedly fell in August led by a decline in infrastructure projects. However, Britain’s statistics office said the weakness did not appear to be linked to the Brexit vote in June.

Construction volumes fell by a monthly 1.5 percent in August after a revised increase of 0.5 percent in July. Economists taking part in a Reuters poll had predicted output would rise by 0.2 percent in August. Compared with August 2015, volumes inched up by 0.2 percent, weaker than the median forecast of 1.5 percent in the Reuters poll.

Britain’s construction industry makes up nearly 6 percent of the economy and Friday’s figures will help investors get a better sense of the impact of the June 23 referendum decision to leave the European Union. The weak performance in August made it likely that construction would be a drag on overall economic growth in the third quarter.

In the three months to August, output was down 1.3 percent compared with the three months to May, the ONS said. All areas of the sector fell in August compared with July with the exception of private commercial work, the ONS said. There have been signs that the sector fared better in September, according to a private purchasing managers survey published earlier this month.

Britain’s economy has weathered the initial Brexit shock better than many economists had feared, but the Bank of England expects construction to be one of the hardest-hit sectors.

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