Spring into action

January turned out to be an even better month than December, itself a good month on a seasonally adjusted basis, with the index for contractors' activity rising by four points to 63, its highest level since the survey began in April 1991. The non-residential building sector remains the most buoyant with an index of 65.

The orders index rose slightly in January, while the index for tender enquiries saw a larger increase.

Firms remain strongly optimistic about the short-term prospects for tender prices and became marginally more upbeat regarding employment prospects in January.

CFR's Leading Construction Activity Indicator, which provides a short-term forecast of activity levels in the construction industry, indicates continuing growth in construction activity over the next three months, although the rate of growth is expected to slow until April before picking up again in May.

On the regional front, the strongest growth in activity was recorded in Northern Ireland and the North-east of England, while the worst declines were found in the North-west and the West Midlands. Regional growth in order books was strongest in Wales and Yorkshire & Humberside.

According to the survey's results, firms working in the building sectors are continuing to experience strong upward pressure on labour costs, with 58% of firms experiencing labour cost increases of more than 5% in the past year.