April 26, 2018 / 11:01 PM / 3 months ago

UK housing starts fall 14 pct in Q1 2018 - NHBC

LONDON, April 27 (Reuters) - British house-builders started work on 14 percent fewer new homes in the first three months of this year, adding to signs that exceptionally cold weather in late February and early March slowed the economy in early 2018.

The National House-Building Council, the main provider of construction insurance, said builders registered plans to start work on 36,637 new homes in the first quarter, down from 42,405 in the first quarter of 2017.

Official data due at 0830 GMT is expected to show that growth in the overall economy weakened to 0.3 percent from 0.4 percent in late 2017, according to a Reuters poll of economists.

Retailers have reported a sharp fall in the number of shoppers due to the snow, and other business surveys have also shown a slowdown in activity due to the low temperatures.

“This fall in registrations in the first three months of 2018 can in part be attributed to the exceptionally bad weather during the start of the year, which severely affected progress on building sites across the country,” the NHBC added.

Looking at the 2017/18 financial year as a whole, housing starts of 154,698 were 2 percent lower than a record high in 2016/17, though this hid a fall of over a fifth in London, and big rises in Wales and parts of northern and central England.

Prime Minister Theresa May wants construction of new homes to rise to 300,000 a year to tackle a shortage of housing.

Some construction sites reported losing 30 working days in early 2018 due to the icy weather - but longer-standing issues such as skills shortages, Brexit uncertainty and short-term market fluctuations also played a role, the trade body said.

The extent to which any slowdown in the economy is due to temporary factors will be a key issue for the Bank of England next week, when policymakers start to consider whether to raise interest rates on May 10.

Until last week, futures prices suggested financial markets were putting a 70 percent probability on rates rising in May for only the second time since the financial crisis.

But after Governor Mark Carney said recent data had been “mixed”, and that policymakers were divided, analysts think the central bank is probably now on the fence. (Reporting by David Milliken Editing by William Schomberg)

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