Firms opt against taking on new staff, as CPA survey predicts industry recession will last two years

Prospects for employment in construction have hit their lowest level since 1992, according to figures from market analyst Experian.

The firm’s monthly economic tracker, compiled for Building, shows that fewer firms are expecting to take on staff than at any point in the past 16 years. The employment index fell to 35, a drop of four points since last month. Fifty is the baseline figure, below which a decline is indicated.

The figures come as a survey published by the Construction Confederation and the Construction Products Association (CPA) predicted that construction will remain in recession for the next two years as the economic slowdown is exacerbated by the rising prices of energy and raw materials.

Contractors who responded to the survey reported that output during the second quarter of 2008 fell compared with the same time a year ago; a net balance of 17% of contractors reported a drop.

Contractors reported that output had fallen in all sectors compared with the first quarter. Falls in private housing were reported by 48% of contractors, with 26% reporting a fall in output in new public sector housing.

The survey also warns that the tightening of government finances may constrain spending in social housing, education and health.

Noble Francis, economics policy development director at the CPA, said: “The further reduction this quarter is of great concern. Increased energy costs and consistent rises in material prices are leading to a reduction in profit margins.”

The RICS’ Building Cost Information Service forecast on Wednesday that raw materials and labour costs would rise by 12% over the next two years.