The UK construction and services industries have seen a downturn in orders, according to figures published today by the Office of National Statistics, highlighting perhaps the first key set of figures reflecting the impact of government cuts in capital investment.

Construction sector orders, reported by the regular ONS construction index, fell 14% and service sectors experienced a similar slowing in growth in orders, perhaps indicating a halt to the first signs of recovery that had previously appeared in recent months.

The figures combine to point towards a GDP growth of just a half percent in Q3, while the figures for employment prospects in both the constructions and services industry showed declining growth.

As the UK government continues to rapidly scale back public sector investment, construction firms who would ordinarily be involved in capital projects have noticed a considerable downturn in business.

Fortunately, the markets have not reacted too badly to the announcement, and the FTSE had entirely recovered from a minor blip by lunchtime to carry on unaffected.  Particularly with other, conflicting reports from the manufacturing industry, it may be the case that the UK economy will survive the short term implications of public sector cuts while being positioned to grow a leaner, more effective and efficient economy over the medium term.

Last Updated: September 6th, 2010