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UK construction output slides in Q1, March worse than forecast

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British construction sector declined sharply in the first quarter, adding to signs the economy struggled against global weakness and uncertainty about June's European Union referendum, data showed Friday.

[LONDON] British construction sector declined sharply in the first quarter, adding to signs the economy struggled against global weakness and uncertainty about June's European Union referendum, data showed Friday.

The Office for National Statistics said construction output, which makes up 6 per cent of the economy, fell 1.1 per cent in the three months to March - worse than its initial estimate of a 0.9 per cent drop.

The weaker reading reflected a dismal March for construction output, which plunged 3.6 per cent compared with February - the worst month-on-month figure since December 2012. Economists polled by Reuters had expected a 2.5 per cent drop.

March marked a third consecutive decline in month-on-month construction output - the first such run since the monthly series started in 2010.

Housebuilding was the only construction sector to generate growth in the first quarter, with infrastructure the biggest drag.

But for March alone, housebuilding output slipped 0.3 per cent after a 2.0 per cent surge in February.

The data underlined Britain's reliance on the much larger services sector to drive economic growth, which slowed to 0.4 per cent in the first quarter, according to an early estimate last month.

Data earlier this week showed factory output fell in the first quarter at the fastest annual rate in nearly three years during March.

Friday's construction data did not point to any revision of the estimate of overall gross domestic product released last month, the ONS said.

The ONS warned the March figure may be prone to larger-than-average revisions because of the timing of Easter. Although its figures are seasonally adjusted, Easter this year fell wholly in March for the first time since the monthly series began.

The Bank of England has said economic data are likely to be hard to interpret in the run-up to the vote on Brexit.

The central bank has highlighted weak commercial property transactions as evidence that companies are holding back investment ahead of the June 23 referendum, which opinion polls show is too close to call.

Construction output fell 4.5 per cent compared with March 2015, the biggest annual drop since March 2013. Economists polled by Reuters had expected a 2.7 per cent decline.

REUTERS