Trade deficit narrows in August

Meanwhile the UK’s trade deficit, which measures how much the country imports compared to its exports, narrowed to £3.3bn in August compared to £4.5bn in July.

Cooling global growth and a strong pound are starting to take their toll on British companies, leaving Bank of England officials in no hurry to raise the benchmark interest rate from a record low.

Construction makes up about 6 percent of Britain’s economy.

In the three months to August, output fell by 0.8%, the biggest such decline since March 2013.

Commenting on the statistics, Mark Robinson, chief executive of Scape Group, said: “Today’s figures need to be dissected and examined carefully before drawing any overall negative conclusions about the trajectory of construction output in the UK”.

The ONS attributed the decline to construction workers taking more vacation in August than is usual for the time of year and wetter-than-normal weather, particularly toward the end of the month.

Housebuilding fell by 3% from July and output in other parts of the sector also contracted for the first across-the-board decline since 2010.

An 8 percent increase in September would be needed for construction output to be unchanged in the third quarter from the second, the ONS said.

House prices have picked up again after a slowdown in the second half of 2014 caused by tighter mortgage lending rules.

The trade figures showed the UK’s deficit in its trade in goods narrowed to £11.1bn in August compared with £12.2bn in July, although a few analysts had expected it to shrink further. According to a key poll of purchasing managers released last week by research firm Markit Economics Ltd., output by British manufacturers slipped to a three-month low in September. Economists had forecast a gap of 2.2 billion pounds. Still, in records of their last policy meeting, BOE policymakers said recent economic data is consistent with a “gentle deceleration”, a natural effect of the economy approaching a balance after emerging from the downturn.

The ONS said on Friday that the combined goods trade deficit for July and August already stood at double the shortfall for the second quarter as a whole.