UK construction output misses expectations in August, weakness not linked to Brexit - ONS

Data released by Britain's statistics office earlier on Friday showed that UK's construction output unexpectedly fell in August led by a decline in infrastructure projects. Data showed that construction volumes fell by a monthly 1.5 percent in August after a revised rise of 0.5 percent in July and widely missing analysts’ forecasts for a 0.2 percent rise.

Compared with August 2015, volumes inched up by 0.2 percent, weaker than the median forecast of 1.5 percent in the Reuters poll. On a quarterly basis, output was down 1.3 percent compared with the three months to May, the ONS said.

The Office for National Statistics said that the weakness did not appear to be linked to the Brexit vote in June since the biggest contributor to the fall in the month was a slump in infrastructure spending rather than private investment. All areas of the sector fell in August compared with July with the exception of private commercial work.

Construction accounts for around 6 percent of UK's GDP and construction sector seems unlikely to make any contribution to Q3 GDP. The reading also suggests that the run of much better than expected data on the economy in the wake of the Brexit vote may be coming to an end.

The Chancellor, Philip Hammond, has signalled that he will announce a boost to infrastructure spending in the 23 November Autumn Statement to help the economy weather the impact of the Brexit vote.