A “disastrous” month for Britain’s building industry today raised fresh fears about recovery in the UK as business leaders warned of stagnant growth and house prices fell again.
The latest alarming figures from the Chartered Institute of Purchasing & Supply showed the nation’s construction industry still stuck in recession during September. Housebuilders endured their worst month since a snow-blighted December 2010, while commercial building work saw its biggest slump for more than two years.
The worrying snapshot of the beleaguered sector’s fortunes offers little hope that the industry will contribute to the economy’s recovery after accounting for half of the UK’s 0.4% decline between April and June.
Cips chief executive David Noble said: “September’s figures show the construction sector’s cupboard to be well and truly bare, rounding off a disastrous quarter. After the longest continual decline in new orders for three years, this is of no surprise.
“Looking ahead, there is little to be positive about. Homebuilding continues to be hit hard, and the commercial sector, so long the star of the industry, has lost its sparkle.”
The latest figures follow another poor showing for manufacturers in September. The British Chambers of Commerce today called on David Cameron to do more to spur on the economy.
The Bank of England is expected to pump billions more into the economy via quantitative easing next month, although lending figures have showed little early impact from its £80 billion Funding for Lending scheme in August.
The BCC’s latest quarterly survey of more than 7500 firms across the UK showed a flat domestic market and weakening export demand, as well as worsening confidence and investment levels among manufacturing and services firms.
The BCC does not agree with official gloomy estimates that the country was in recession for three consecutive quarters, but added that “it is clear that the economy is stagnant”.
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Director general John Longworth said the coalition should stick to deficit reduction but called for “immediate” measures to support investment as confidence is hit by the eurozone crisis, including a voucher scheme offering £5000 of free advice for 20,000 businesses.
He said: “Businesses need to know that the Government is taking decisive action to get the economy growing. They also need advice and support to be able to grow.”
House prices added to the gloom in September after a surprise 0.4% fall that caught economists off-guard, according to building society Nationwide. The latest fall, in a month when the market picks up after the summer slowdown, left prices 1.4% down on a year ago.
Nationwide chief economist Robert Gardner said the market was likely to stagnate or decline over the year ahead but warned a sudden rise in unemployment could lead to bigger declines.
He added: “Labour- market developments will remain of paramount importance in deciding the trajectory of house prices.”
