April's no fool

The April survey from Experian's Business Strategies division reports an increase in the industry's activity levels, with employment prospects and tender prices set to follow in the same direction

April was another good month for contractors, with the activity index rising a further point from March to reach 58. But despite the continued rise, the index is still some way below the level of 63 registered in January.

The medium-term outlook is fairly promising. The orders index increased by two points in April to 72, while the index for tender enquiries made an even larger gain, jumping four points to 62.

Firms are still relatively optimistic about short-term employment prospects, while optimism regarding tender prices is also on an upwards curve.

But all this activity could be creating scarcities. In the building sector, there has been a sharp rise in the percentage of firms experiencing large increases in material costs: 19% of firms reported increases compared to 7.5% in March.

Looking ahead, the Leading Construction Activity Indicator, which forecasts activity levels in the short term, indicates continuing growth in activity over the next three months, with the growth rate remaining steady over the period.

According to the latest orders figures from the DTI, total construction output rose by 14% in the first quarter of 2004, mainly thanks to a strong rise in commercial orders. The sector saw a 46% increase compared to the previous quarter and 19% compared to the first quarter of 2003.

The value of industrial and infrastructure orders fell by 15% quarter on quarter. Year on year, industrial orders remained unchanged, but infrastructure orders dropped sharply by 48%.

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.

This an extract from the monthly Focus survey of construction activity undertaken by Experian’s Business Strategies division 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 division’s forecasts and services can be obtained from: telephone – 0870-196 8263; website – www.constructionfutures.co.uk