UK construction output slumps in August, lower imports help trade gap

[October 10, 2014]  LONDON (Reuters) - British construction fell sharply in August, adding to signs of a slowdown in other areas of the economy, official figures showed on Friday.

Separate figures showed Britain's goods trade deficit narrowed in August as imports fell more sharply than exports.

Construction output slid a monthly 3.9 percent in August after rising an upwardly revised 1.9 percent in July, the Office for National Statistics said.

That meant output in the sector was 0.3 percent lower than in August last year for the first year-on-year fall since May 2013, the ONS said.

Data earlier this week showed industrial production was flat in August compared with July, adding to signs that Britain's pace of recovery may have slowed in the third quarter from growth of 0.9 percent in the second quarter.

Friday's figures contrast with a Markit purchasing managers' survey last week which showed that the construction sector grew at one of the fastest rates on record in September.

Britain's deficit in its trade in goods narrowed in August to 9.099 billion pounds from a revised 10.414 billion pounds in July, which was the biggest on record.

August's deficit was the narrowest since April, the ONS also said on Friday.

Economists in a Reuters poll had forecast a gap of 9.6 billion pounds.

Including Britain's surplus in its trade in services, the overall trade deficit narrowed to 1.917 billion pounds from 3.079 billion pounds in July.

Volumes of goods exports fell 2.3 percent while imports were down 6.2 percent, largely due to erratic goods as well as chemicals and oil, the ONS said.

A sharp slowdown in growth in the euro zone economies, Britain's main trading partners, has added to the challenge of boosting the country's exporters and putting the country's economic recovery on a sounder footing.

Exports by Germany suffered their biggest slump in August since the financial crisis, data showed on Thursday, raising concerns about the risk of a new recession in the single currency area.

British goods exports to the European Union by 0.6 percent in August from July to their lowest level since February. Imports from the EU fell by 1.2 percent.

(Reporting by William Schomberg and Li-mei Hoang)

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