Housebuilding hits three-year low, in new blow to Chancellor Osborne

By Joe Mellor, Deputy Editor

More economic gloom as housebuilding activity plunged to lowest level in almost three years.

The depressing figures follow on from news in the manufacturing sector, reeling from poor global conditions and the looming EU referendum.

Tuesday’s manufacturing index showed it had slipped to its worst month in almost three years in February.

The housebuilding data comes from Markit/CIPS construction purchasing managers’ index growth in the building sector which sank to a 10 month low in February.

Developers are less willing to commit to projects due to the uncertain economic issues on the horizon. This has led to construction chiefs hiring less bricklayers.

Now housebuilding growth slumped to its lowest level since June 2013.

David Noble, chief executive of the Chartered Institute of Procurement and Supply, said: “The sector felt the pressure of challenging global economic conditions and softer demand growth.

“The housing sector, which once led the way with a robust performance, offered a poor show.

“The next few months will be critical to understanding whether this dampened optimism was justified and whether there are still more serious issues to be unearthed.”

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, added: “Recent sharp falls in business confidence, partly reflecting economic uncertainty brought about by the EU referendum, are subduing the recovery in construction activity.”

Howard Archer, chief UK and European economist at IHS Global Insight, said: “This is more worrying news for the UK economy. “The Government will be particularly disappointed to see housebuilding slow given that it is looking to address the UK’s acute housing shortage.”

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