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UK Construction Slows after Brexit Vote

Experts are downplaying any possible link between the recent vote by the United Kingdom to leave the European Union and the slowdown of British construction in August.

Construction output fell by 1.5% in August after it had gone up just a tick in July, according to the Office of National Statistics. A Reuters poll of economists had shown an expectation of an increase of .2%. The Guardian put it this way:

The ONS cautioned that monthly data could be choppy and noted that the drop in construction in August had been driven by a 5.1% fall in infrastructure output. That subsector of the construction industry covers big projects such as wind farms, roads, railways and nuclear plants and its output data can be volatile. Infrastructure output rose by 6.1% in July.

“Construction output has fallen back quite sharply in recent months and contracted by 1.5% in August. As the fall this month is led by infrastructure, it seems unlikely that post-referendum uncertainties are having an impact,” said the ONS’s senior statistician, Kate Davies. “Monthly construction data can be quite erratic, so we would warn against trying to read too much into one set of figures.”

In its lengthy report, which you can see in full here, the Office of National Statistics warned against reading too much into the data provided for a single month.

“All new work, and repair and maintenance reported decreases, falling by 1.4% and 1.5% respectively, with the largest downwards contribution in all new work coming from infrastructure,” the report said. “The underlying pattern as suggested by the 3 month on 3 month movement in output in the construction industry decreased by 1.3%.”

“The longer-term picture as suggested by the year-on-year movement shows output in the construction industry increased by 0.2% compared with August 2015 with all new work increasing by 1.1%, however, repair and maintenance decreased by 1.3%,” the agency said.

This is only the agency’s second report of data after the historic "Brexit" vote.