In this month's Tracker, Experian Business Strategies reports some of the highest construction activity levels for 10 years and forecasts steady growth for the rest of the summer
In May, the trend for increases in the activity index continued, with a rise of another point to 59. Barring January’s index of 63, which appears to be something of an anomaly, this matches the highest point that the index has reached in almost 10 years.
The orders index remained unchanged from April at 72, while the tender enquiries index could not maintain April’s momentum, falling two points to 60.
Optimism surrounding the short-term employment prospects in the industry continues to grow, as it does for tender prices.
CFR’s Leading Construction Activity Indicator, which provides a short-term forecast of activity levels in the industry, indicates continuing growth at a steady rate in construction activity over the next three months.
According to the latest update from Experian’s construction forecasting and research team, the volume of construction output increased by 4.4% in 2003, twice the 2.2% increase in GDP. The outlook for this year is still positive though the growth rate will moderate to 3.4%. It is forecast to slow further to 2.7% in 2005 before picking up again to 3% in 2006. The public sectors are expected to be the main drivers of growth over the forecast period, with both the housing and non-residential sectors likely to see double digit rises in output.
On the regional front, the strongest growth in activity levels was in the West Midlands. Order books were strongest in northern England.
The survey is conducted monthly among about 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.
In addition, quarterly questions seek information on materials costs, labour costs and work in hand.
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 division’s forecasts and services can be obtained from 0870-1968 263 and www.constructionfutures.co.uk
Experian Business Strategies