With recession a near certainty, the question is how deep

With recession a near certainty, the question is how deep

The latest new orders figures and CIPS survey leave little if any room for doubt, construction is dropping into a recession fast and the drop looks deep.

The more worrying thing about the figures is that last year forecasters were looking to the private sector to make up for expected falls in publicly funded work.

But it is only a solid level of orders from the public sector that is halting a much deeper fall in construction work being let. The main sectors of private work have collapsed.

Orders just fell off a cliff in April. In the four months since there has been 19% less new work let than in the year to April.

If we look at the four months to August for private housing it will be no surprise to see that down 25% on the previous four months and 44% on the same period a year ago.

Of greater concern is the drop in the giant commercial sector, which saw a drop of 27% and 38% over those periods.

But if we look at the CIPS September survey we can expect to see even worse when the ONS releases its figures for the month.

The CIPS Purchasing Managers Index for September showed orders down again, while the overall index of industry performance dropped from 40.5 to 38.8, with 50 marking no change on the previous month.

We can expect some revisions to the new orders data, given the volatility both in volumes and prices at present, but the picture is unlikely to look pleasant either way.

Unless the Government takes the unlikely step of boosting investment in construction, a recession now looks unavoidable and more worryingly it looks as if that recession could be deep.

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