George Osborne stated in his 2015 autumn statement that there would be a building boom, this was in an aim to tackle the UK housing shortage, however the strength of the building sector has begun to show signs of weakness in the time since and the boom in office buildings in London has actually failed to prevent the worst month of April in Britain’s construction industry in almost three years.
The construction firms have blamed a fundamental lack of new orders for the decline in the economy in the UK as a whole. The slump in manufacturing has alarmed economist and powered the speculations around the GDP growth. The growth will slow further to 0.4% in the first quarter.
It is likely that the government will be put under pressure to halter the downturn in construction figures following the run of figures in recent months. The worst affected group being housing builders. The PMI (Purchasing Managers’ Index) adjusted the construction index to 52 in April (Any number over 50 represents growth) the reading showed 3 years of sustained output growth for the construction sector.
The survey was compiled by Markit and stated the latest figure was actually a decline for the March figure of 54.2 and represented the slowest expansion of business motions in the sector since mid-2013.
The growth forecasts for the UK economy come alongside a lot of uncertainty ahead of the EU referendum. Which appear to have been provided reasons for potential clients to delay major expenditure decisions until the future is clearer. There’s a general reluctance of housebuilders to invest and in turn this is actually contributing to growth issues. The CPA (Construction Products Association) represents suppliers to the construction industry, recently adjusted growth forecasts negatively but still expects growth to be more than the 1.8% forecast for the economy in the UK.