UK construction output slows down in spite of supply shortage

According to latest data, UK construction output contracted by 1% in July from June, while economists' were expecting growth of 0.5%.

• This week Halifax house prices showed property prices in UK went up 2.7% in August, totaling 9% for three months to August as there exists a shortage from supply side. Rising property prices remains headache for Bank of England (BOE) policy makers, as they are outpacing growth in wages, increasing debt burden on individuals.
• Moreover BOE members are expecting to hike rates at turn of the year, risks further increase in debt burden for households as Mortgage lending rates are likely to move up once the bank hike rates.

When it comes to supply side, this is the second time construction output shrank in last three months. In June output growth was 0.9%, while it contracted by 1% in May.

Output in July is down -0.7% on yearly basis compared to 2.6% growth seen in June.

However overall drop in construction output also poses doubts over UK's economic and business strength as it has slowed down considerably in 2015, after showing strength in 2014.

UK's benchmark stock index FTSE100 is currently trading at 6130, down more than -6.5% this year so far.