The overall construction activity index remain unchanged between May and June, with orders below normal for this time of year, despite the orders index increasing. Experian Economics reports
01 / THE STATE OF PLAY
Experian’s construction activity index remained unchanged at 46 in June - it has been below the no-change mark of 50 in each month since November 2010. The non-residential sector was the only one to see its index decline, falling by three points to 43, a level not seen since May of last year.
Meanwhile, the residential index rose by three points while remaining in negative territory at 45 while the civil engineering one saw the biggest increase of seven points to 54, taking the index above the no-change mark.
Orders were still below normal for the time of year despite the orders index increasing by four points to 47. The civil engineering orders index decreased by seven points to 43. In contrast, the residential orders index saw a rise of four points to 43. The non-residential orders index also saw an increase, as it went up by six points to 57. The index has been in positive territory since March 2010.
The percentage of respondents reporting no constraints on activity increased marginally to 19% but insufficient demand became less important as a restricting factor on activity. It fell dramatically from 60% to 48%. This is the lowest reading since November 2010. Bad weather as a constraint on business activity became more of a concern as 14% of firms reported this - its highest level since December 2010, while the proportion of respondents reporting finance as a limitation remained unchanged at 16%.
In June the employment index rose by one point to 39 but, despite this, firms are yet again indicating that they expect employment levels to decrease over the next three months. The employment index has been in negative territory since January 2008.
02 / LEADING CONSTRUCTION ACTIVITY INDICATOR
CFR’s Leading Construction Activity Indicator is predicted to increase by two points to 48 in July. The index is due to slightly decrease by one point to 47 in August before rising back again to 48 in September.
The indicator uses a base level of 50: an index above that level indicates an increase in activity, below that level a decrease.
03 / WORK IN HAND
In June 2012, around 59% of residential respondents reported less than three months work in hand while for non-residential and civil engineering firms this was 51% and 76% respectively. The non-residential sector saw the highest proportion of respondents (31%) reporting that they had enough work to keep them active for between three and six months.
Three months ago the civil engineering sector reported that zero work was readily available after six months. The latest figures for the sector show that approximately 14% of respondents are now stating that they have more than six months of work in hand. In June, the proportion of both residential (19%) and non-residential (18%) firms reporting more than six months work in hand remained higher than for the civil engineering sector.
04 / REGIONAL PERSPECTIVE
Experian’s regional composite indices incorporate current activity levels, the state of order books and the number of tender enquiries received by contractors to provide a measure of the relative strength of each regional industry.
The latest data shows that six of the eleven regions in the UK saw a rise in their index. The North saw the greatest increase as its index went up by seven points to 58.
The West Midlands and Scotland both saw their indices increase by four points however, while the former region remained in negative territory at 42, the latter moved above the no-change mark of 50 to 52. Yorkshire and Humberside followed closely behind as its index rose by three points to 47. Both East Anglia (44) and the North-west (41) saw their indices edge up by one point.
The South-west saw the greatest decline in its index, as it dropped by six points to 52. Despite this fall the index remained in positive territory for the fifth consecutive month. Northern Ireland (33) saw its index decrease by four points while the East Midlands’ (43) index fell by two points.
Both Wales (46) and the South-east (55) saw no-change in their indices.
As a whole the UK index, which includes firms working in five or more regions, declined by six points to 42 - its lowest level since April 2009.
This an extract from the monthly Focus survey of construction activity undertaken by Experian Economics 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 Economics’ forecasts and services can be obtained by calling 020-7746 8217 or logging on to www.experian.co.uk/economics. 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.