Growing but slowing

Contractors' activity continued to grow during January, although the rate of growth, as measured by the activity index, fell two points to 56.

The orders index also fell a couple of points in January to 69, and the tenders index stood at 55 points, down three from December.

Firms are slightly more optimistic about short-term employment prospects in January, with the index increasing one point to 51. Optimism concerning tender prices, however, is reduced from December with the index falling two points – although it still remains high at 66.

The Leading Construction Activity Indicator, which provides a short-term forecast of activity levels in the construction industry, indicates continuing growth in activity over the next three months but suggests that the rate of growth is likely to decline slightly over the period.

New work construction orders increased 6.2% between 2003 and 2004 nationwide. The greatest increase was in the commercial sector where new work orders were 19% greater in 2004 than in 2003. Both private and public housing also recorded substantial increases, up 16% and 17% respectively. The infrastructure and industrial sectors were the only sectors to record a fall in orders, down 28% and 10% over the same period.

In the regions, East Anglia recorded the greatest year-on-year increase, with new work orders up 44% in current prices. The South-west also performed well, recording an increase of 27%, whereas the North-west was the only region to suffer a fall in orders (–1%).