In this month's market review, Experian Business Strategies reports that the industry's recent growth spurt is about to come to a halt, with construction activity sagging towards November
The growth rate of construction activity has been rising since March and this trend continued in July, when the index rose slightly to 57. Activity levels rose at the fastest rate in the non-residential and civil engineering sectors.

However, the orders, tender enquiries, tender prices and employment indices were all down in July compared with June, although order levels remained high. This is likely to result in a slackening of the activity index over the next few months.

Fifty-three per cent of firms identified a constraint on activity in July. The main constraints were labour shortages (21%) and insufficient demand (19%). Firms continue to face pressures from rising labour costs, although annual rises have eased marginally since April for building and civil engineering firms.

Industry growth is expected to slow over the next three months, according to CFR's Leading Construction Activity Indicator. The indicator is set to fall from 56 in August to 53 in November, as recent falls in orders and tender enquiries feed through to activity levels.

According to the Department of Trade and Industry's latest data, construction output in Britain increased by 6.6% in the second quarter of 2003 compared with the same period a year earlier and was up 5.3% relative to the previous quarter.

Construction activity picked up slightly in July, with the activity index for all firms rising by one point to 57. The smoothed activity index, which looks at the trend in activity over the past three months, saw its second consecutive monthly improvement, to 57.

The proportion of firms reporting constraints on activity levels rose marginally in July to 53%, compared with 52% in June. This seems to be largely due to a steadily increasing share of respondents identifying labour shortages as a constraint, up another percentage point to 21% in July. Insufficient demand remains a difficulty for 19% of firms.

This an extract from the monthly Focus survey of construction activity undertaken by Experian Business Strategies on behalf of the European Commission as part of its suite of harmonised EU business surveys. The full survey results and further information on Experian Business Strategies’ forecasts and services can be obtained by calling 0870-196 8263 or visit the website

The survey is conducted monthly among some 800 firms throughout the United Kingdom and the analysis is broken down by size of firm, sector of the industry and region. The results are weighted to reflect the size of respondents. In addition to the results published in this extract, all of the monthly topics are available by sector, region and size of firm. In addition quarterly questions seek information on materials costs, labour costs and work in hand.


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