Construction industry suffers biggest fall in jobs since 1993

The number of construction workers has suffered its steepest fall for more than 11 years, according to figures yesterday that were the latest to highlight a slowdown in the property market.

About 38,000 jobs were lost in the sector over the three months to July, the biggest fall since a cull of 56,000 in December 1993 when the housing market was suffering the hangover of the crash, the Office for National Statistics said.

Construction firms slashed their demand for new workers, with a 4,700 cut in vacancies, the largest for any sector measured by the ONS. The figures follow a series of downbeat statements from housebuilders such as Bovis, Taylor Woodrow and Berkeley.

The Construction Confederation said the slowdown in growth was driven entirely by a fall-off in private-sector demand. Its survey for the second quarter showed one-fifth of companies on balance reported a fall in public and private housing work while one in 10 said commercial work was down.

Kurt Calder, a spokesman for the confederation, said: "The pace of growth has slowed. There are still an awful lot of skills shortages in the crafts, and I don't think that you will see queues of unemployed operatives just yet.

"The growth is still mainly from government investment, but private-sector demand, and in particular housing, is slower."

A spokesman for the House Builders Federation said: "Construction employment also includes repairs and maintenance so there may be an element that's related to the downturn in consumer confidence because people are spending less. One thing they might have cut back on is home improvement."

The ONS said unemployment rose for the seventh month in a row, the longest run since the UK was still locked in the early-1990s recession. The number of people claiming jobless benefit rose by 1,600 to 866,200 in August. The preferred survey-based measure of unemployment rose by 12,000 over the three months to July.

There were falls in job numbers in manufacturing, utilities and hotels and restaurants, although they were partially offset by rises in transport, financial services and education and health - which includes public-sector jobs.

Analysts said the overall job data painted a mixed picture of the labour market that would help keep interest rates on hold. While the claimant count rose, the 1,600 increase was less than the 4,800 the City has forecast. July's rise was revised down by half.

Employment rose to a fresh all-time record although at a slower pace than the growth in the population, implying little sign of labour shortages. Growth in average earnings - the component most closely watched by the Bank of England - rose to 4.4 per cent in July from June's 4 per cent.

This put it just below the 4.5 per cent threshold policymakers believe is compatible with stable inflation. Stripping out bonuses, the rise was just 4.0 per cent.

Redundancies rose, vacancies fell and there was a rise in the number of economically inactive people who said that they wanted to work.

John Philpott, the chief economist at the Chartered Institute of Personnel and Development, said: "The labour market is clearly off the boil."