This article was last updated on April 16, 2022
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The construction Industry has stopped showing growth and new orders have started to fall as the time passes by, since the credit crunch began.
These facts are uncovered by a closely watched survey that comes as monetary policymakers consider whether to invest more into the economy.Britain’s construction sector has slowed down to “near stagnation” last month. This is an addition to the fears of the economy’s being descended towards recession.
The Markit purchasing managers’ index has fallen from 52.6 in August to 50.1 in September. It is only just above the crucial break-even mark of 50, which signals expansion. According to Markit, any number above 50 indicates an increase in activity. An economist at information provider Markit, Sarah Bingham; who has compiled the Survey told that only a backlog of work from previous months had prevented the sector slipping into decline.
Chief Executive at the Chartered Institute of Purchasing & Supply, David Noble has said that the delayed and cancelled projects, more competitive tendering and general uncertainty over economic conditions are making the conditions worst. The construction sector only accounts for about 6 per cent of gross domestic product but it has an immense influence on overall GDP figures because activity tends to be unpredictable. The weak numbers follow a surprisingly positive survey of the manufacturing sector, which accounts for 13 per cent of GDP.
The Bank of England’s monetary policy committee will take on its decision at the week’s end whether to take risk of pumping additional money into the economy through purchasing government’s bonds. According to the majority of economists, it’s hard to predict the decision now as it can go in either way.
However, the construction companies are continuing to show optimism about their prospects over the next year through hiring new workers. But a real estate industry partner at Deloitte, Nigel Shilton, has told that the property and construction sectors have been hit hardest by the current economic uncertainty. He further added that the prevailing situation will persist till the next for the construction sector and would particularly strike medium-sized firms as compared to the big ones.
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