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Fears that the UK may dip back into a recession have been further fuelled by new statistics regarding the building sector, from the Markit/ Clips Construction PMI Index.

The figures, which are based on a survey of building firms and conducted monthly, show a 0.9 reduction since last month. Although it still stands at 52.6 and anything above 50 is said to indicate growth, it is the lowest result since the building sector started to grow again at the beginning of this year.

Additionally, separate figures from the Office of National Statistics have shown that the demand for construction has also fallen. Data concerning the second quarter of this year showed a 16.3% drop in new construction orders in comparrison to the first quarter of this year. This brings the level of new orders to its lowest for thirty years, including during the recession.

Orders from the public sector for both housing and non housing contracts reduced by more than 30% in the second quarter according to the statistics from the ONS.

These massive differences between the first and second quarters illustrate the instability of the economy, especially since the building sector has never yet reached the level it was at before the recession.

The low levels of orders has increased competitiveness between building firms forcing them to reduce prices. However, input costs have risen dramatically this month due to the increased prices of raw materials and fuel, which has further pressurised profit margins. This has led to many building firms resorting to making redundancies and using less sub- contractors.

David Noble, the cheif economist at the Chartered Institute of Purchasing and Supply, has expressed his concerns over the figures. He is positive that technically the building sector is still growing but fears that this may not be the case for much longer.

About The Author

Lee Murphy

MAAT and ICPA accountant, with a passion for making accountancy and bookkeeping accessible. Other interests include cloud-based software development for web and mobile access, keeping fit, reading, and entrepreneurship.

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