U.K. Construction Slumped in March as Snow Stalled Projects
(Bloomberg) -- U.K. construction output plunged in March after heavy snow brought swathes of the country to a standstill.
Work volumes in the building industry declined 2.3 percent from February, rounding off the weakest quarter in almost six years, the Office for National Statistics said Thursday.
Separate figures showed manufacturing output declined 0.1 percent in March, a second month of contraction, though the ONS said there is no anecdotal evidence from factories that the weather played a role. Overall industrial production climbed 0.1 percent, as freezing temperatures boosted demand for energy.
The figures come as the Bank of England prepares to announce its latest policy decision. Economists and investors, who until recently saw an interest-rate increase today as near-guaranteed, now expect no change after the economy barely grew in the opening months of the year.
Disruptions caused by the Beast from the East snowstorm affected the construction industry across the board in March, with infrastructure and housing the worst hit. It left the sector down 4.9 percent from a year earlier, the steepest drop since January 2013.
In the first quarter, construction output declined 2.7 percent, the biggest fall since the second quarter of 2012, though slightly less than the 3.3 percent estimated in GDP data last month. Output may also have been hit by the collapse of contractor Carillion in January, the ONS said.
Industrial production grew 0.6 percent between January and March, revised from a previously stated 0.7 percent. Manufacturing, which enjoyed a record run last year amid buoyant global growth, expanded just 0.2 percent.
“Today’s figures support previous estimates showing the economy was very sluggish in the first quarter of 2018, with little impact overall from the bad weather,” said ONS statistician Rob Kent-Smith.
Within manufacturing, both domestic and international sales stalled, with rising output of machinery, transport and computer equipment offset by falling production of electrical equipment and refined oil products.
Separate figures showed the trade deficit narrowing slightly to 6.9 billion pounds ($9.4 billion) in the first quarter amid reduced imports of ships, clothing and aircraft from outside the European Union. It suggests trade made a small contribution to growth.
Eyes on Carney
In March, the shortfall widened to 3.1 billion pounds, as imports of goods surged 8.1 percent on shipments of non-monetary gold. Exports rose 4.4 percent.
Governor Mark Carney is due to hold a press conference at 12.30 p.m. following the BOE’s noon announcement. Investors will be anxious to see whether he reinforces their view about the path of rate increases.
While a rebound is expected this quarter, the economy appears to have lost some underlying momentum, with purchasing-manager surveys for April suggesting growth remained subdued.
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