Construction industry hit by worst slowdown in a
decade
By David Prosser, Deputy Business Editor
Britain's construction industry
suffered its worst slowdown in more than a decade during May, the
Chartered Institute of Purchasing and Supply (Cips) said yesterday, as
builders were hit by the slowing economy and a collapse in the housing
sector.
Cips said activity in the construction sector slowed for the third month
running in May, with an index reading of 43.9 compared with 46.1 in
April. Any reading below 50 signals a slowdown.
The decline between April and May was the fastest rate of contraction
since Cips began its monthly surveys of the construction sector in April
1997.
Roy Ayliffe, the group's director of professional practice, said: "May
data for the sector heralded a further, more marked contraction in
levels of new business and, notably, the use of subcontractors fell at
the fastest rate in survey history as demand for their service continued
to wane."
Activity in the housing market was particularly depressed, with the
index for this sub-sector of the construction market falling from 40.3
in April to 32.7 last month. A series of housebuilders have issued
profits warnings and cut building plans in recent weeks.
The figures reflect fears that the economy is sliding towards recession,
with Cips also warning this week that the manufacturing sector's
three-year run of monthly growth had come to an end. Manufacturing has
until now been the most resilient sector of the economy.
Meanwhile, Nationwide Building Society said yesterday that consumer
confidence had slipped further during May, registering a new low for the
second consecutive month. Fionnuala Earley, the society's chief
economist, said: "Darker economic news throughout the month as fuel
prices reached new highs, food prices remained elevated and uncertainty
about an early cut in interest rates heightened, are likely to be major
factors in this."
The Bank of England's Monetary Policy Committee begins its monthly
two-day meeting today but few economists expect it to announce a cut in
interest rates tomorrow, with fears of rising inflation outweighing
concern about the slowing economy. |