The latest construction activity survey by Markit/CIPS suggests that the construction market remains pretty buoyant, with a monthly growth rate at 56.4 for March. This was above the long-term average of around 54.
However, you should be a bit cautious before drawing the conclusion that the industry is in fine fettle from these figures. Not that many with a grip on reality would.
Much of this growth appears to have come from a bounce back in the housing and commercial sectors after a winter slowdown. We might sensibly then assume that the bad weather has influenced the picture quite a bit.
Certainly, if we crudely average the figures over the past six months to get a broader feel for recent activity we still see growth in total construction activity, but a shade below the long-term trend on this measure.
Meanwhile looking at the data in this way at a sector level, housing activity would seem to be fairly flat, which broadly matches the word on the street. And the survey figures for civils and commercial work point to moderately comfortably growth. This may ring true for some, but not others.
And, unsurprisingly, optimism – measured at 61.0 – remains unfeasibly high as it always seems to within this survey, leaving one to suspect that buyers are among the great optimists within the industry.
But more worryingly and more upsettingly for the thousands who draw a living from construction, the survey suggests employment prospects remains subdued below the no-growth mark of 50, having turned negative and remained negative since June 2008 with the exception of a small positive showing in May and June of last year.
But it is the hike in input prices that is the real worry within the figures. And I guess here you have to take the views of buyers very seriously indeed.
The graph above shows that the rate of growth of prices suggested by these figures is close to matching the level seen just before the recession. If the trend continues this will put severe pressure on firms, especially those who have shaved or dispensed with margins in order to feed their order books.