UK’s Construction sector is on the brink of a double dip

2011-08-24T01:31:00Z

Great Britain’s construction industry seems to be on the brink of a double dip. The latest figures reveal that growth in the sector hit an eight-month low in October.

Construction was credited with fuelling better-than-expected GDP growth in the second and third quarters, however industry experts have warned that this recovery would be short-lived. This is due to the construction sector being amongst the most vulnerable industries to a double dip.

October's purchasing managers' index, which is being published by the Chartered Institute of Purchasing & Supply and Markit, seems to justify these concerns.The barometer did not only hit its lowest reading since February but loads of construction companies were also forced into another round of job cuts in the last couple of weeks.

The purchasing managers' index touched 51.6 in October, which is just 1.6 points away from the importantl 50 mark which represents the dividing line between contraction and growth.

Michael Levack, head of the Scottish Building Federation (SBF), said: "These latest figures confirm recent warnings from the SBF that the rise in construction output at the beginning of this year was never going to last.

"With public capital spending potentially facing huge cuts, our members remain extremely worried about the short-term outlook for their business. Unless something is done to maintain public investment, the odds on a double-dip recession in Scottish construction are now looking considerably shorter."

The construction sector across the UK has expanded by 11 per cent since the end of the recession , according to government statistics. Industry leaders warn however that this figure gives a misleading impression of recovery beinga bounce-back from the lows of the recession.

The Construction Products Association has recently warned that the construction sector would enter a double-dip recession in early 2011. Economists said yesterday however that a double dip in the construction industry would not necessarily jeopardise the rest of the economy. This is due to the fact that construction accounts to only 6.3 per cent of GDP.

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UK’s Construction sector is on the brink of a double dip