Easing off the gas

In this month's survey, Experian Business Strategies reports that growth in construction activity continued to lose momentum in April and that it is expected to maintain its slightly cautious pace until July

The rate of growth in construction activity has been moderating since October and the index fell slightly further in April, to 54*. While activity levels are rising in building firms, they have experienced a slight drop in the civil engineering sector.

There were minor increases in orders and tender enquiries in April. There were more substantial rises, however, in employment figures and tender prices for the month, which would suggest a fairly healthy prognosis for these two indices over the next quarter. The improvement in the tender prices index coincides with the end of the financial year, suggesting that the increase may be the result of price changes being put into place after end-of-year reviews.

The results of our latest survey show that 55% of respondents identified a constraint on activity in April. The main constraints highlighted in the survey were insufficient demand (21%), labour shortages (11%) and finance (8%).

Firms also continue to face pressure from pronounced increases in labour costs, although the growing expense of labour in both building and civil engineering firms has eased off slightly since January.

According to Construction Forecasting and Research's Leading Construction Activity Indicator, which incorporates a range of factors to assess the industry's prospects over the next quarter, growth in the UK's construction industry is expected to slow over the next three months. The indicator is set to fall until July, although an upturn is expected in August as April's rise in orders and tender enquiries feeds through into activity levels.

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 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 forecasts and services for the construction industry can be obtained from Experian Business Strategies; telephone: 0870-196 8262; website - www.constructionfutures.co.uk