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Monday, 5 September 2011

Construction and Manufacturing Businesses Struggling

According to the Office of National Statistics, the volumes of new orders in the construction sector in the second quarter of this year has been the lowest since 1980.  In addition, the purchasing managers index (PMI) for August has shown a drop in activity to its lowest levels since the end of last year.  Construction activity fell in line with  expectations to 52.6 in August from 53.5 in July,  but lets not forget that this is still above the 50-mark that separates growth from contraction. The volume of infrastructure orders in the second quarter fell by 25.9pc compared with the previous quarter and fell by 44.2pc against last year, and is at its lowest value since the first quarter of 2006.  Some have suggested that the UK embarks on a large housebuilding programme to stimulate growth and help the imabalance between demand and supply. 

The survey followed evidence that Britain’s manufacturing industry is struggling after contracting for two straight months amid mounting fears about the stalling global recovery.  UK manufacturers have been doing well  by exporting and the global recovery is key to maintaining this momentum.  Today, has seen more big falls on the world markets as worries persist on the global economy. 

Construction businesses and manufacturing businesses are vulnerable to economic cycles as they cannot adjust their position quickly to ease cashflow problems in the way that some service businesses can do.  Capital can be tied up in plant or work in progress. 

If a debt is causing the company cashflow problems it is possible to use a company voluntary arrangement or CVA to allow the business to pay off the debt over time.

For expert insolvency advice call KSA Group on 0800 9700539

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