The latest data from the Office of National Statistics (ONS) states output has fallen despite growth in the final two months of 2017.
Compared with January last year, output has fallen by 3.9%, the largest month-on-year decline since March 2013. With output also falling by 1% in the three-month on three-month series, the sector has contracted for the ninth consecutive period.
ONS said the fall was drive mostly by the continued decline in private commercial work, which fell by 4.1% in January. New orders also decreased by 25% between October to December 2017, however this followed a record high in the previous quarter caused by the award of several high-value new orders relating to High Speed 2.
Michael Thirkettle, Chief Executive of leading construction consulting and design agency McBains, said: "These latest figures are evidence that 2018 began much the same as 2017 ended – a continuation of sluggish output not helped by factors such as ongoing uncertainty over the Brexit deal – reflected by the significant decline in new commercial work –and high costs of materials needed to build as a result of a weak pound.
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"The fact that this week the government has challenged the construction industry to build more homes will require a stable economy and a supportive environment that encourages builders to build, otherwise there is absolutely no chance of the government's ambitious housebuilding targets being hit."
Mark Robinson, Scape Group Chief Executive, said a "toxic mix" of higher costs, a weaker sterling, and an unsettled economic outlook caused the total value of work to drop almost 4% on the year to £12.6 billion.
"However it is important to remember that there remains a very significant need for new schools, housing and infrastructure to meet the demands of the UK's ever expanding population," he said.
"The Government should use next week's Spring Statement to double-down on investment for growth. Quicker decisions from the Government on more ambitious projects, such as the new Heathrow runway, would go some way to lift the mood in the industry.
"Whilst it is positive to see that housing work remains higher than the same time last year, the drop off over the last couple of months is concerning, particularly in light of the Government's wave of housing announcements. Hopefully Theresa May's promises earlier this week to cut red tape and make the planning process more transparent will help make a U-turn in new housing work over the coming months."
(LM)
