UK construction activity declined more than expected last month, according to official figures, while sector experts said the sector looks set for a tough time in 2017.
The Office for National Statistics revealed construction output fell 0.4%, slightly worse than the consensus forecast for a drop of 0.2%.
Output deteriorated from the previous month's 1.8% gain, which had benefited from an upward revision.
On a yearly basis, construction grew 2.0%, well up on the 0.3% expected but slower than the revised previous 2.6%.
Thanks to significant revisions that indicated the slowdown in the construction sector last year was less severe than at first seemed, the ONS estimated output increased by 2.4% year-over-year in 2016, rather than 1.5%.
Private housing construction was the strongest contributor to the sector, expanding 13.1%, while private commercial work increased 8.6%, but private industrial work fell by 9.5% and infrastructure work declined by 9.2%.
Rebecca Larkin, Senior Economist at the Construction Products Association, commented: “Following an increase in output in Q4 last year, the overall fall in construction output in the opening month of 2017 was disappointing, with a decrease in housing, industrial, commercial and RM&I activity over the month.
“Furthermore, the construction new orders data from the ONS suggests that there may be continued weakness in activity in some sectors during 2017. Commercial new orders tailed off in the second half of 2016 and in Q4 were 10.6% lower than in Q3 and fell 24.1% from a year ago, and new orders in the industrial sector were the lowest in two years. Building work in both sectors requires a large up-front investment for a long-term rate of return and it appears decision-making has been clouded by a rise in economic uncertainty.
“Taking total new orders growth of 2.9% in 2016 as a whole, however, shows there remains an impetus for construction activity over the next 12 months. As echoed in our forecasts, output during 2017 will be driven by higher orders for housing – both private and public – as well as infrastructure and new public sector buildings such as schools and hospitals.”
