Builder layoffs hit highest level since lockdown in protracted housing downturn
Construction companies are laying off builders at the fastest rate since lockdown amid a protracted housing downturn.
Companies shed more jobs in February than at any point since November 2020 as builders scrambled to cut costs, according to the S&P Global UK Construction purchasing managers index (PMI).
Staffing numbers fell for the second month in a row, with companies blaming low levels of new work and high wage bills.
Tim Moore at S&P Global said: “A protracted downturn in activity has made construction companies cautious about their employment numbers.”
The downturn has been felt most sharply in the housing market. Housebuilding has been in decline since late 2022, when high interest rates and the cost of living crisis began to weigh heavily on demand for new homes.
The end of the Help to Buy equity loan scheme, which closed to new buyers in October 2022, also removed a major source of support for first-time buyers.
Brick maker Ibstock on Tuesday separately reported a 70pc crash in profits after the slowdown in homebuilding reduced demand for materials.
The London-listed supplier said its profits before tax had plummeted to £30m in the year to Dec 31 2023, compared to £105m the year before.
The company has already taken several cost cutting measures, including laying off staff.
Despite the sharp drop in construction employment, there are signs that Britain’s housebuilding market is now starting to stabilise.
S&P’s housing activity index jumped from 44.2 in January to 49.8 in February, the strongest reading since November 2022. While a figure below 50 means the sector is still in contraction, the market is now close to stability.
Overall construction activity rose to 49.7, up from 48.8 in January, to hit its highest level since August 2020.
Business confidence rose to a two-year high, with more than half of building companies expecting a rise in activity in the year ahead.
Rob Wood, chief UK economist at Pantheon Macroeconomics, said: “Expected interest rate cuts are breathing life into house building.”
Expectations of lower future borrowing costs mean the average rate on a two-year fixed rate mortgage has dropped from a peak of 6.85pc last summer to 5.76pc, according to Moneyfacts.
