Builders expect extra 45,000 jobs to be lost

Click to follow
The Independent Online

Business Editor

The construction industry forecast yesterday that another 45,000 jobs would go this year as the second leg of a double-dip recession continues to hit the industry.

The gloom from the construction industry contrasted sharply with official figures showing a 21 per cent increase in new construction orders in the fourth quarter of last year compared with the third.

The Department of the Environment also said the total volume of new orders in December was the highest for two years.

But the difference between the two pictures of construction was explained by a bunching of unusually large project orders and the long time lag between placing an order and work on site.

The jobs forecast for the full year from the Construction Industry Employers Council is more than twice the 20,000 job losses forecast last month by the Building Employers Confederation by the end of the first quarter of 1996. Last year employment in the industry grew by 7,000, but 460,000 jobs have been lost since 1989, bringing the total down to 1.38 million by last October

The CIEC said the sharp increase in new orders was due to a few big projects, including the pounds 350m Bluewater retail and leisure development in Kent.

Furthermore, most of the new orders would not come through to work on site until late 1996 or the beginning of 1997 and would not be in time to prevent a further dip of about 1 per cent in construction output this year, the CIEC said.

Output declined for 14 successive quarters to the fourth quarter of 1993 when it rose again, but last year the promise of recovery was dashed, with a further decline as the double-dip recession took hold in the industry, in contrast to the growth of the rest of the economy.

Martin Laing, chairman of the CIEC, said: "The stark message conveyed in all our recent surveys is that the fall in workload and jobs will continue during early 1996."

But Mr Laing said he was encouraged by the latest government figures, which showed that the total volume of new orders in the fourth quarter of 1995 was the highest since 1993.

Mr Laing identified weak public sector demand as a big problem for the industry.

"Construction is the only major industry that has failed to share in Britain's wider economic recovery," he said. There were two urgent requirements for the continuing decline to be reversed - a return of confidence in the housing market and government action to galvanise the Private Finance Initiative (PFI) into generating substantial numbers of new projects quickly.

Mr Laing said it would be another year before the PFI produced a constant stream of contracts that would replace the cuts in government spending.

However, personal tax cuts would take effect in two months' time and as long as interest rates were pitched at the lowest possible level, there were grounds for cautious optimism that the housing market would begin to recover.