Activity in March may have been less buoyant than a month earlier but it’s still running along quite nicely. Civil engineering continued to dominate, putting the residential and non-residential sectors in the shade. And, according to Experian Business Strategies, order books were healthy
01 The state of play
Although the growth of construction activity in March was less buoyant than February, Experian’s latest survey of contractors showed that the industry continued to expand at a healthy rate. The overall activity index, combining responses from all three sectors and across all regions, fell two points to 59, which is still firmly in the increasing zone (a value of 50 suggests no change, below 50 a decline and above 50 an increase).
Many contractors reported that their order books were above average for the time of year and that the level of enquiries they received remained strong. The outlook for employment was weaker than it had been in February, but a slim majority still believe they will be recruiting at some point in the next three months.
Civil engineering’s dominance was maintained in March. Its activity index only managed a marginal increase during the month but at least it staved off a decline, which the residential and non-residential sectors were unable to do. The residential activity index fell by three points and the non-residential fell by two points, although both indices remained sufficiently high to suggest that activity continued to increase at a slower rate.
Optimism about further employment prospects varied significantly from sector to sector. Civil engineering firms said they were likely to increase their headcount in the coming months, while responses from residential and non-residential firms were more downbeat.
02 Leading Construction Activity Indicator
When we last asked contractors about their levels of work-in-hand, most had at least three months and many had more than six. In March, however, the work-in-hand buffer was significantly shorter for many respondents.
Three months ago about 20% of respondents operating in all three sectors had six months’ work-in-hand. In March, only 6.5% of non-residential respondents and absolutely no civil engineering firms reported having more than six months of work-in-hand. The residential sector fared better with 17.6% of respondents reporting more than six months of work-in-hand.
For most construction firms, work-in-hand levels fell between three and six months. However, the strength of the national tender enquiries index suggests that there is considerable scope for firms to boost their work-in-hand levels if these enquiries can be converted into orders.
04 Regional perspective
Regional performances were varied in March. The composite indicators for six regions rose during the month, in three they fell and in two the measure was unchanged. Regional composite indicators incorporate activity, orders and tender enquiries from the past three months to provide a comparable measure of each region’s relative performance.
East Anglia topped the regional league table in February but strong increases in Northern Ireland and the South-west were sufficient to push it into second place in March. Northern Ireland’s indicator rose robustly by 10 points to 70 and a four point increase in the South-west’s also took it to 70, and joint first place.
Outside Northern Ireland and the South-west, moderate increases were seen in the East Midlands,the West Midlands, north-west England and South-east. Apart from the South-east all of these regions’ indicators rose three points. The South-east’s indicator increased one point.
March was a less successful month for Yorkshire and Humberside, Wales, and East Anglia – the composite indicators in all three took a tumble.
The decline was most severe in Yorkshire and Humberside and its indicator fell by five points to 55, the lowest level across all of the UK’s regions.
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’ forecasts and services can be obtained by calling 020-7746 8263 or logging on to www.constructionfutures.co.uk
The survey is conducted monthly among 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. As well as 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.