The construction industry recently saw 0.9% growth in the sector, but critics are concerned at the apparent slowdown for construction following the boom.
Encouraging news recently came to light when it was revealed that the UK’s construction industry growth has reached its highest point in 17 years. The construction PMI for July-September 2014 was at 63.5, where an average of 50 indicates growth.
Chris Williams, chief economist for Markit, said: ‘more encouraging news on the health of the UK economy.’ He added: ‘although [construction] only represents around 6-7% of GDP, the sheer pace of expansion signalled by the PMI suggests that the construction sector can provide a meaningful boost to economic growth in the third quarter.’
However, there are concerns that the construction industry has reached a peak and will soon be slowed. Nationwide bank has reported a 0.2% drop in house prices – the first time the figure has fallen in well over a year. This slide coincides with the Bank of England announcement this week that mortgage applications also slipped again for the second consecutive month in August.
The pace of construction industry expansion has slowed, despite the recent 0.9% growth in the sector. Concerns are that the sector is facing another tough period, with demand for new homes lowering once more. Said Williams: ‘construction firms’ optimism in relation to the outlook fell to the lowest for nearly a year in September, sullied by concerns over a slowing housing market, shortages of both skilled labour and suitable subcontractors, higher interest rates and a general weakening of growth in the wider economy.’
Despite the slowdown after a growth period, a close eye is being kept on the upcoming 2015 General Election, as parties push for votes through promises of boosts to the construction industry.
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