Construction shows robust growth but manufacturing exports perform poorly
The latest data by the Office for National Statistics showed that construction output in the UK increased by 5.3% in June compared to the same month a year ago. The increase was driven by year-on-year growth of 5.4% in new work, while repair and maintenance work increased by 5.0%. Within new work, private housing output performed strongly and is up 2.0% month-on-month and private industrial work increased by 2.7%. The only major sector to show a monthly decline was infrastructure, which fell by 1.9%. Overall, the construction sector remains in good strength.
The ONS revised up the latest estimate of construction, which showed a fall of 0.5% over the quarter, to show no quarterly growth overall; however, as this is volatile, annual growth gives a more informative picture. This feeds in to the overall GDP growth rate, but as construction is a small component of the economy, the effect is not evident at one decimal place.
The ONS also released data today which showed that the UK’s trade deficit widened slightly compared to May, increasing from £2.4bn to £2.5bn in June. While trade in goods recorded a deficit, a surplus in trade in services partially offset it. The deficit in trade in goods widened last month by £0.3bn as both imports and exports fell, but exports by more. Important contributions to the decrease in exports were falls in oil and manufactured goods exports. This comes after disappointing manufacturing figures released on Wednesday showed growth falling to 1.2% year-on-year, while Purchasing Managers’ Indices for the sector are also relatively weak.
Overall today’s figures are consistent with Cebr’s view of a recovery which is beginning to lose steam in certain places, most notably manufacturing. However, growth elsewhere shows that the recovery continues and the economy is broadly in good shape.