New house building slowed at its quickest space in nearly four years during May according to official figures published by the Office for National Statistics (ONS).
The UK saw a 5.8% fall in building activity which represents the biggest drop since October 2011. The dip also helped drag the wider construction sector to a 1.3% contraction – its worst fall since February last year.
But there was better news for the economy from separate ONS figures showing that the UK’s trade deficit fell to its lowest level since June 2013 in May, down to £393m from £1.8b in April.
However the fall in the trade deficit was the result of the imports decreasing rather than overseas sales powering ahead as exports remained unchanged.
The construction data highlights the challenges facing the industry as George Osborne sets out plans which will see developers automatically given permission to build on suitable brownfield land.
The slump in housebuilding in May reverses a promising increase of 5.3% in the previous month. The contraction in the wider sector is the second month in a row that it has shrunk, with the decline deepening after a 0.5% fall in April.