Going steady

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This month, although the outlook for the industry remains positive, the rate of growth looks set to fall from the dizzy heights of 2002

The outlook for the industry is pretty positive – although the rate of expansion is likely to slow in the next quarter. This is the latest prediction from Construction Forecasting and Research's leading construction activity indicator.

The indicator is put together using information about past levels of activity, orders and tender enquiries to assess the prospects for construction. For the first quarter of 2003, the leading indicator shows a slight fall to +10%, down from +12% in the final quarter of 2002.

As for December's figures, activity levels continued to rise and there was a slight increase in the activity balance compared with November. Insufficient demand is proving to be less of a drag on growth, and the amount of work in hand has increased across all sectors.

Tender enquiries rose substantially following a September-November lull, and orders remained robust, with another substantial increase in the orders balance. Reflecting this, firms are more optimistic about tender prices and employment.

CFR has rebased its data series used to produce these monthly results to address one of the biases all surveys suffer from – where true zero is. For example, the order books series has consistently produced a negative balance, despite the industry moving from recession through to boom over the period of the survey. The adjustments seek to address this problem and to produce a truer indication of the level of firms' order books over the period. The rebasing is based on actual orders and output data published by the DTI.

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 European Union 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 by logging on to www.constructionfutures.co.uk.

The survey is conducted monthly among some 800 firms throughout the UK 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.