UK construction shrinking at fastest rate in 11 years

The Chartered Institute of Purchasing and Supply (CIPS)/Markit construction index has fallen from 35.1 in October to 31.8 in November and marks the lowest reading since the measure began back in 1997.

The index is a further indication that Britain’s construction sector contracted last month, due to the fact that the rate of new house building has all but ceased as developers are having trouble initially raising finance, as well as selling finished housing units in an increasingly difficult and unstable property market.

Activity in construction has been hit across the board, from a reduction in new orders and buying activity to job losses.

The industry output, as well as new orders, have fallen simultaneously which has resulted in the fast paced shrinking that it being experienced, hence the widespread job cuts with middle managers the most likely to face redundancies.

Howard Archer, the chief UK and European economist at IHS Global Research, has said that the fortunes of the construction industry will affect the depth of the contraction of the overall economy in the fourth quarter and increases the possibility of further interest rate cuts later this week.

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