The warning of a possible double dip recession seemed closer to reality with the latest insight to the state of the economy. The construction industry showed a slowdown in business. Also the service sector cut jobs and housing prices fell. It could be that economic growth will soon disappear and the economy will see another recession.
Service sector jobs are being lost at a rate not seen since last October. Unfortunately this was one of the private sector divisions that were to supply jobs to keep the economy in growth. It is unlikely that hiring would increase in this division over the next few months. It would therefore appear that the private sector will be little prepared to supply jobs to counteract those lost due to government budget cuts.
The Office for National Statistics reported that orders within the construction building sector had fallen in the second quarter by 14 per cent. Analysts believe this slowdown can be attributed to the slowing pace of the housing market. Private housing orders for the second quarter of the year fell by 24 per cent.
The housing market is seeing an influx of houses being brought to market and very few buyers obtaining mortgage approval. First time buyers are finding it hard to qualify. Without those buyers coming into the market to buy homes on the bottom of the ladder, so called “starter homes”, there are no buyers to allow others to upgrade.
According to the latest survey by Nationwide the average value of a home in Britain fell by 0.9 per cent in August. That means that the average British house is worth 166,507 pounds, which amounts to a loss on average of over 3,000 pounds off the value of a home. August was the third consecutive month to see declines.
With employment taking a hit and an even bigger hit in the months ahead due to budget cuts, the housing market slowed, and construction industry seeing a slowdown it could signal the economy is about to see another dip into recession status.