Construction sector slows

Posted by Kelly Luff in Credit Crunch on 7 January 2015 - Kelly is a Marketing Executive at checkmyfile

The UK economy is in a difficult position; so much rides on house prices and the construction of new homes and yet we are seeing a situation where many are unable to afford to pay either their mortgage or rent, let alone save for a home. So the construction industry is therefore finding itself in the midst of this problem.

The Markit/CIPS purchasing managers' index (PMI) survey has found that the construction sector in the UK has grown at its slowest level for 17 months in December 2014. It does remain in a robust position, however, due to continued growth in new house building.

Despite the sector slowing, Markit states that housebuilders overall have enjoyed their best year since 1997. Wages have also increased throughout the sector, with rates paid to sub-contractors growing.

A huge problem for the construction industry at the moment is labour. With the recession causing many within the sector to look for more reliable work, some housebuilding companies are finding that a shortage of workers is causing developments that should be steaming ahead to slow down whilst they try to find more builders.

In addition to a lack of experienced workers, the recession also caused many firms to let go of apprentices or halt taking on new staff through apprenticeships. With builders who made hay while the sun shone in the 1990s and early noughties retiring, the lack of workers is becoming more and more apparent as the market heats up.

This shortage is in turn then leading those still within the industry to be able to name their price for the work they do, which many would argue should be the case in an environment where every third house on many developments is built for free.

With buyers paying more than 6 times the average salary for the standard house and the construction workers themselves often being paid less than they were ten years ago, the money is going somewhere and it appears to be in the housebuilders pockets, so maybe it is time for things to equal out between the builder, the buyer and the large companies within the industry.

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