British construction data drops in May

British construction data drops in May

LONDON - Reuters
British construction data drops in May

A woman looks over the City of London from the 69th floor of the Shard, a newly-built skyscraper. Poor construction data has hurt hopes for a UK economic recovery.

British firms built less in May than a year earlier even with an extra working day, official data showed on July 13, further denting hopes that the struggling economy had emerged from recession in the second quarter.

The country fell back into its second recession in four years at the turn of the year and a recent slew of gloomy economic data has raised fears that the downturn extended into the April-June period. 

Construction output dropped 6.3 percent in May on a non-seasonably adjusted basis, the Office for National Statistics said, warning that caution should be taken when interpreting the monthly movements involving May and June 2012.

Firms failed to benefit from a May public holiday being postponed until June, when another day was added to celebrate the Queen’s Diamond Jubilee.

“This (data) supports our view that the economy remained in recession in the second quarter,” said Vicky Redwood at Capital Economics: “In theory there should have been a boost to those numbers from the extra day, so the underlying trend is even worse than those numbers point to.”

Between March and May construction output fell 7.4 percent compared to the same three months in 2011, the ONS said. New public housing work plunged by 22.9 percent, while volumes of new public non-housing excluding infrastructure and new infrastructure fell by almost as much.

Official data earlier this week showed manufacturers got a lift in May from the postponed holiday, a move which then boosted retail sales in June according to a survey. Construction activity fell at its fastest pace in 2.5 years in June, a Purchasing Managers’ Survey showed earlier this month, and sister surveys found that manufacturing contracted for the second straight month while the dominant service sector endured one of its worst months in the past three years.