Construction plunges
Construction activity fell to a record low in July, driven by the collapse of the housing market and the stuttering economy, the latest survey showed yesterday.
According to the Chartered Institute of Purchasing and Supply’s construction PMI, building levels fell to 36.7 last month, from 38.8 in June.
Any reading below 50 means the sector – which is made up of housing, commercial space (offices, shops, and warehouses) and civil engineering – is contracting, not expanding.
There were more jobs lost last month in the construction sector than ever before, the survey said.
This adds to a growing body of evidence that Britain could be lurching into recession, as unemployment rises and the cost of fuel, energy and food rocket. “There can therefore be little doubt that the construction sector is now firmly in recession,” said Howard Archer, an economist at Global Insight.
He added: “The sector looks to be in for an extended, very difficult time. This reinforces our belief that the overall economy is more likely than not to contract in the second half of 2008.”
The construction sector is particularly vulnerable to the credit crunch and the economic downturn because its boom was helped by big government spending on infrastructure and cheap money that helped trigger the lending squeeze. Sharp declines in construction activity could still hit banks hard.
The Bank of England is not expected to cut interest rates on Thursday as inflation is running at 3.8 per cent almost twice the bank’s target.