In this month's tracker, Construction Forecasting and Research reports that a chilly May turned into a splendid June, with activity rising sharply on the back of government spending …
Activity in the construction industry rebounded in June following a poor performance in May: the activity balance for large firms jumped by nearly 50 points.
Meanwhile, the outlook is fairly benign. The order books balance fell during June and that for tender enquiries remained stable. There is little overall change in employment expectations and the outlook for tender prices is for a moderation in rises.
The evidence suggests that large firms and those in the civil engineering sector are likely to experience a moderation in activity following some months of robust growth. Balances on tender enquiries and orders fell 20 points and 32 points respectively.
Civil engineering firms currently have ample work, with 87% reporting that they had more than three months work-in-hand, compared with 51% in the previous quarter. These firms are, as a result, very optimistic about future employment. However, the balances on tender enquiries and orders fell 17 points and 18 points respectively.
Data from the DTI shows that the volume of new construction orders was up 9% in the three months to May compared with the previous three months. Government spending is driving the increase, with orders in the infrastructure sector up 23% in the same three months compared with the previous period and 21% higher in the public non-residential sector. More unexpected was the contribution of the industrial sector, where the volume of orders rose 18%.
All sectors recorded a relatively strong increase in their activity balances in June – the largest was in the non-residential sector where the balance rose 10 points. In the residential sector, the balance rose five points to +2% and the civil engineering sector it was up six points to +7%.
Activity balances were up across most regions in June, with only those contractors operating in East Anglia and the West Midlands experiencing a fall in their activity balances. The greatest improvements were found in Northern Ireland, Scotland, the East Midlands and the South West. Contractors operating across the UK also experienced a sharp increase of 24 percentage points, Despite these improvements, however, six regions still returned negative balances.
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. Quarterly questions also seek information on materials costs, labour costs and work in hand.
This an extract from the monthly focus survey of construction activity undertaken by Construction Forecasting and Research on behalf of the European Commission as part of its suite of harmonised EU business surveys. The full survey results and further information on CFR's forecasts and services can be obtained from CFR by phoning 020-7808 7070 or logging on to www.constructionfutures.co.uk.