Pootling along

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

(See table)

03 Work-in-hand

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.