Belfast Telegraph

Building slowdown fuels fears of further recession

By Peter Cripps

Fears about the health of the UK's economy have been fanned after two key surveys revealed a worrying slowdown in the construction industry.

New orders fell by 16.3% in the second quarter of this year to their lowest level since 1980, the Office for National Statistics revealed.

And the sector grew in August at its slowest pace this year as the housing sector continued to contract and confidence hit its lowest level for seven months, according to a Markit/CIPS survey.

The surveys suggest the sector, which has seen strong growth in recent months, could be running out of momentum and will add to fears that the UK's economy is in danger of slipping back into recession.

The gloomy surveys suggest the sector, which grew by 0.5% in the second quarter of the year, is being dragged downwards as confidence is eroded amid the Government spending cuts and the general global economic slowdown.

The manufacturing sector is also suffering a slowdown, according to recent figures, while the powerhouse services sector is still in growth but is being squeezed as disposable income is hit by inflation.

Howard Archer, economist at IHS Global Insight, said the latest ONS construction data were "horrible" and it "bodes ill for output prospects in the near term at least".

The ONS data revealed that orders for new public and private housing fell 32% and 21% compared to a year ago, while infrastructure orders were 44% down.

Meanwhile, the Markit/CIPS survey, where a reading above 50 indicates growth, showed that the sector slowed to 52.6 in August, down from 53.5 in the previous month. New business increased at its mildest rate for seven months.

The housing sector posted another decline in activity, while an improved performance from commercial industry was outweighed by a weaker rise in civil engineering work.

The construction industry continued to battle with rising prices, which increased at their fastest rate for three months, and also made more job cuts.