UK construction output in biggest fall since 2012

A slowdown in housebuilding in January contributed to the biggest monthly decline in construction output since June 2012.

Construction output fell by 3.4% in January from December, the Office for National Statistics (ONS) said.

The UK statistics body said the construction sector remained "a weak spot" in the economy.

Separate ONS data showed growth in the manufacturing sector slowed in January, while the trade deficit widened.

'Toxic combination'

The ONS said the fall in construction in January stemmed from a decline in all new work. It said the main contribution to the fall came from private housing, although that followed a record high reached in December.

Comparing the three-month period to January with the previous three months - seen as a better indicator of underlying performance - construction output fell by 1%, the ninth time in a row this measure has contracted.

Ole Black, a senior statistician at the ONS, said: "Construction continues to be a weak spot in the UK economy with a big drop in commercial developments, along with a slowdown in housebuilding after its very strong end to last year."

The government has been trying to boost home construction in an attempt to give more people the opportunity to buy their own property.

Earlier this week, Prime Minister Theresa May announced reforms to planning rules in England to try to get housebuilders to build more properties.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "Rising interest rates and Brexit uncertainty are proving to be a toxic combination for the construction sector.

"The sharp decline in output in January primarily reflected an 8.3% month-to-month collapse in new work in the private housing sector.

He added that he doubted that housebuilding would see a quick recovery. "The prospect of further increases in interest rates is subduing buyer demand both for new and existing homes."

Production rebound

The ONS said growth in the manufacturing sector slowed to 0.1% in January from 0.3% in December.

However, despite the slowdown, the sector has now expanded for nine months in a row for the first time since records began in 1968.

The wider measure of industrial production grew 1.3%, rebounding from a 1.3% decline in December. Output was helped by the reopening of the Forties oil pipeline, which had been shut for repairs.

The trade deficit in goods and services widened by £600m to £3.1bn between December and January.

The ONS said the deficit widened as rising oil prices led to more expensive fuel imports.