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Britain's growth prospects take new hit as housebuilding slows to three year low

Economy:
Britain's growth prospects take new hit as housebuilding slows to three year low

MORE cracks have appeared in Britain's growth prospects after the pace of housebuilding slowed to its lowest levels for more than three years.

Despite Government measures, cheap mortgage deals and an improved planning system underpinning bullish outlook statements from building companies, the results of March's Markit /CIPS construction purchasing managers' survey painted a more subdued picture.

Housebuilding, for so long the main driver of construction output, is now lagging behind commercial and civil engineering, with weaker job creation indicating firms are less confident.

The PMI index, at 54.2 remained above the 50-point mark, denoting expansion in construction activity, but overall output growth was unchanged from February's 10-month low.

The increase in housing activity was "marginal" and the weakest since January 2013.

David Noble, chief executive at the Chartered Institute of Procurement and Supply, said clients were unwilling to commit to new contracts or expand existing work.

He said: "Where the housing sector was once the star, it became the weakest performer in March.

Britain's growth prospects take new hit as housebuilding slows to three year low

Britain's growth prospects take new hit as housebuilding slows to three year low

"Hopes for positive employment news were dashed, as the rate of growth in staffing slowed to a pace last seen in June 2013 amid a landscape of continuing skills shortages after the end of the recession."

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, added: "the drop in the housing activity index suggests the sector's problems run deeper than business concerns about Brexit.

" It seems that the stimulus to housebuilding from strong gains in house prices is being offset by sharp increases in labour costs due to skilled worker shortages.

Britain's growth prospects take new hit as housebuilding slows to three year low

"the drop in the employment index to its lowest level since June 2013 and the stability of the future activity index at a 16-month low indicate builders expect the slowdown to persist. "

The slowdown in construction, which represents about 6 per cent of UK GDP, follows a downbeat PMI report on manufacturing activity as falling demand from overseas markets hits exports.

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05 April 2016, 6:00