Taking the latest monthly construction survey from the buyers’ body CIPS at face value we could be tempted into thinking all is looking well set for the year.
The overall index bounced sharply back from 49.1 to 53.7 – that means from below the 50 no change mark to a figure that suggests reasonably sound growth.
And, says the survey release, there was not just a boost to work done but a rise in new business. More encouragingly optimism among the companies surveyed was at an eight-month high.
A more thoughtful view presented by Chris Williamson, the chief economist at Markit that puts the survey together, suggested that when the estimated effect of the snow was taken into account the underlying growth trend remained modest.
Interestingly he suggested growth and not decline. This growth he said was really stagnation or there abouts in housing, with commercial showing noteworthy expansion. Given that civils work will have been highly impacted by the snow it is hard to judge the January figure in comparison with that for December.
There is however a paradox in the data, with both subcontractor usage and jobs declining. This is not the pattern one would expect to associate with growth.
Indeed job cuts and reduced use of subcontractors is consistent with an industry preparing for or accepting decline.
So my advice would be to take the optimistic elements of this survey with a pinch of salt. With all surveys there is likely to be some bias, and as I have illustrated before this survey does tend to overdo the optimism.