Losing momentum

Contractors' activity continued to grow during April, while the rate of growth increased for the first time in four months.

The result of this growth was an increase of four points in the activity index to 55. Orders and tenders also continued to grow in April, with indices for both unchanged from the previous month at 64 and 54 points respectively.

However, short-term employment prospects deteriorated in April for the first time since 1999, with the index falling three points to 49. Optimism on tender prices has also lessened compared to March, with the index falling by two points. On the other hand, a level of 61 suggests that prices are set to continue upwards.

The 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.

However, it also suggests the rate of growth is likely to be slightly lower than that of the previous two months.

According to Experian Business Strategies’ latest price forecast, construction output prices rose by 6.4% in 2004. This increase was driven by the residential sector, where private housing output increased by nearly 12%, and public housing output was up by 7%.

While prices are expected to continue on an upward trend in 2005, the rate of increase is expected to be a moderate 2.2%.

Residential inflation is expected to moderate, while prices in the non-residential sector will increase. Little change is expected in the civil engineering sector.

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 forecasts and services from Experian’s Business Strategies division can be obtained by calling 0870 196 8263 or logging on to www.constructionfutures.co.uk

The survey is conducted monthly among some 800 firms throughout the United Kingdom 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.