Tracker: December 2018

01 / State of play

The total activity index recorded modest growth of two points to 57 in December, cementing its recovery from the weak mid-year results. The R&M activity index jumped 20 points to 57 after a strong contraction to 37 in November.

At the sector level, the residential and civils indices both climbed to the same level of 61. The former gained eight points, the latter five. In contrast, the non-residential activity index experienced a rather large drop of 10 points to 47.

Overall orders and tender enquiries remained in positive territory: the orders index stood at 64, following a six-point increase. The tenders index was up by just one point, settling at 54.

Residential orders reached 65, with a seven-point rise since November. Non-residential orders climbed to the same level, from November’s 60. The civil engineering orders index was the only one to disappoint, falling by two points to 56.

On tenders, residential was the only one on the expansionary side, its index staying at 58. Non-residential tenders grew by two points but remained in negative territory at 47. The civil engineering index settled at the no-growth threshold of 50, following a four-point fall.

The tender prices index remained little changed from last month, ticking down one point to 62.

The employment prospects index approached the no-growth threshold of 50, falling for the second month in a row – losing four points to 53.

The results from December suggest the share of respondents experiencing no activity constraints is falling: 33% of respondents reported no constraints, five percentage points lower than November. The main constraint was insufficient demand, as reported by 21% of respondents. Financial constraints cited as a major factor for 16% of the respondents. Labour shortages took third place among known constraints, with 8% of respondents seemingly experiencing difficulties in procuring suitable workers. 

02 / Leading construction activity indicators

The contractors’ activity index for December grew two points to 57 from November’s 55. The leading activity indicator is expected to slow down in the next four months, but to remain above the threshold of 50. On average, the indicator is projected to stay around 54 for the forecast period.

03 / Work in hand

The amount of work in hand for December in the residential sector showed improvement, as the share of respondents having work in hand for more than six months rose to almost 50%. The shares of respondents with work in hand for less than three months and for between three and six months both fell to 26% each. In the case of the non-residential sector, the share of respondents with work in hand for more than six months decreased marginally by one percentage point. The share of respondents with work in hand for less than three months decreased by 15 percentage points, whereas the share of respondents with work in hand for three to six months increased by 16 percentage points.

The amount of work in hand in the civil engineering sector has increased, according to December’s results, as the share of respondents with work in hand for less than three months decreased to 75%. The decrease was offset by 25% of respondents having work in hand for three to six months. Again, no respondents indicated having work in hand for more than six months.

04 / Regional perspectives

Experian’s regional composite indices incorporate current activity levels, the state of order books and the level of tender enquiries received by contractors to provide a measure of the relative strength of each regional industry.

The best-performing region in terms of its index is again the South-west, after falling into second place in November. Its index gained two points to 67 – the only index above 60. The East Midlands – last month’s number one – lost 13 points, falling to 55. Scotland and Northern Ireland took second and third place , respectively. Scotland’s index ticked up a point to 59, whereas Northern Ireland’s fell by two to 57. 

The East of England continued to be the worst performer: its index decreased by two points to 37, marking a 15th month of contraction. The South-east index also fell in December, losing six points to 42. The North-west was the other region in negative territory in December and recorded a decrease in its respective index, falling two points to 44.

Yorkshire and Humberside returned to positive territory after six consecutive months of contraction – its index gained 11 points to 54. 

The UK composite index contracted for a second consecutive month. The fall was stronger than November’s marginal drop of one point, with the index sliding four points into negative territory to reach 49.