Tracker: December 2015

01 / State of play

The construction activity index expanded by 10 points on a monthly basis in December to reach 57 points, recovering from the previous month’s low and increasing the three-month moving average to 52. This was its first visit into positive territory in five months. The repair and maintenance (R&M) indicator increased to 49; nevertheless this is the third month in a row where it has been below 50. Activity at the sub sector level rose across the board in December. Residential expanded by four points to 56, while non-residential increased by the same margin to 52, returning to positive territory. Finally, the civil engineering (42) index increased by six points but remained entrenched in negative territory for the fourth consecutive month. At 68 points, the orders index improved again, with a month-on-month increase of two points. Tender enquiries rose by seven points in December to their highest level since October 2014. The percentage of respondents reporting no constraints to construction activity decreased after two successive monthly increases. It had fallen to 18.3%, down from 37% in the previous month; its smallest percentage since March 2013. Concerns about bad weather contributed to this decrease, as 12.2% of respondents mentioned this as an issue, up from 7.4% a month earlier. Worries over insufficient demand fell from 33.3% in November to 32.9% in the following month. Material /equipment shortages at 3.7 % were reported as an issue for the first time in three months. Finances woes were flagged by 12.2%, the highest proportion since May 2015. Labour shortages (11%) increased marginally from the month before while other factors witnessed their highest response in 2015 at 9.8%. The employment prospects index ticked upwards in December, at 53 points it rose slightly above its 12-month average of 51. This is the first time since July the index has been in positive territory.

02 / Leading construction activity indicator

In December the CFR’s Leading Construction Activity Indicator increased by 10 points to 57 on a monthly basis, thereby returning to positive territory after falling to 47 a month earlier. The indicator uses a base level of 50: an index value above that level suggests an increase in activity, while one below it highlights a decrease.

03 / Work in hand

During December 2015 a large proportion of civil engineering respondents reported less than three months of work in hand (88%), this was slightly less for the non-residential sector (64%). The smallest proportion was accounted for under the residential one, at 27%, although it has the highest amount of work in hand over the coming three to six months.

In contrast, the civil engineering (13%) and non-residential sectors (9%) reported comparatively low proportions.

04 / Regional perspectives

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.

In December there was a mixed bag of results for each of the regions and devolved nations, in-terms of activity indices. Yorkshire & Humber saw the largest monthly fall with a 14-point decline to 55, the index’s third successive contraction, yet it remained firmly above the no change mark. The East Midlands (56) followed a similar trend, also posting its third straight decline, to its lowest value since October 2012. East Anglia (52), the South-east (51) and North-east (52) all experienced less severe contractions, but each held firm in expansion territory. The Welsh activity index remained in negative territory, although it was its least negative posting for six months, after increasing by eight points to 45. Scotland’s index managed a three point rise on a monthly basis, although its index remained depressed at a level of 42 points. The North-west (42) and West Midlands (44) rose slightly on a monthly basis, yet remained below 50. Meanwhile the South-west was unchanged at 51 points, the same is true for Northern Ireland (47).

The UK index edged down on a monthly basis to reach 55, below its 12 month average of 58.