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01 / STATE OF PLAY

CFR’s Leading Construction Activity Indicator is predicted to edge back slightly in May, but will remain above the no-change mark at 53. The following two months will see the index unchanged, before a one-point increase takes the indicator to 54 for August. The construction activity index gained three points in April, taking it back to its February level of 54. This is the fourth consecutive month of rising activity.

The orders index added five points, taking it back into positive territory at 52. This was only the third month since June 2008 that the index had shown above-average orders for the time of year. The residential orders index jumped nine points but remained below the no-change mark at 48. The civil engineering orders index edged up three points to 58, while the non-residential index continued to see above-average orders for the 38th consecutive month, as it reached 62.

The percentage of respondents reporting no constraint on activity increased to 22% in April, its joint highest level in six months. Better weather appeared to be largely responsible for this, as the percentage of people indicating this was holding up their activity fell to just 2%. Insufficient demand became marginally more of a concern in April, with 49% of firms indicating this was constraining activity, up from 47% in March. Labour shortages (1%) and other factors constraining activity (2%) remained minor worries while no respondents indicated material/equipment shortages were holding up activity. Financial constraints remained a significant drag on growth, with the percentage of firms reporting this rising to 23%.

The employment index climbed back up to 46 in April. The index has been in negative territory since December 2007 indicating that further employment cuts are expected within the industry, although the trend has been generally less pessimistic in recent months.

The tender prices index edged up one point to 50, indicating firms expect their prices to remain constant over the coming three months.

02 / LEADING CONSTRUCTION ACTIVITY INDICATOR

After slipping back to just above the no-change mark in March, the construction activity index gained three points to reach 54 in April. The R&M activity index saw an increase of two points, but remained firmly in negative territory at 41.The indicator uses a base level of 50: an index above that level indicates an increase in activity, below that level a decrease.

03 / LABOUR COSTS

The percentage of building firms reporting falling labour costs declined for the second consecutive quarter in April, with 26% of respondents indicating that this was affecting them. About 30% of people indicated that they had experienced annual labour cost inflation of less than 2.5%, down 5% from three months ago. The percentage of respondents indicating that their wage bill had risen by between 2.6% and 5% rose to 33%, up 13% from January. The share of firms reporting labour cost inflation over 7.6% increased by 5% in April to 11%.

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 April, seven of the 11 regions in the UK saw a rise in their index. The West Midlands and the North-west saw the sharpest increase in their indices, each rising by six points to 52 and 47, respectively.
In the case of the West Midlands this was the first time the index had been in positive territory since November 2009, while the North-west’s index reached a five-year high but still remained below the no-change mark. Elsewhere, East Anglia and Northern Ireland had two-point rises in their indices to 47 and 43 respectively, while the North-east (49) and South-east (57) both experienced three-point increases. In Scotland the index edged up one point but remain firmly in negative territory at 41.

The indices for four regions declined with the South-west having the sharpest fall, as it lost eight points but remained above the no-change mark at 60. The index for Wales slid four points to take it into negative territory for the first time in four months at 48. The index for Yorkshire and Humberside fell three points to 50, while the East Midlands lost one point to reach 63.

The UK index, which includes firms working in five or more regions, remained unchanged from March at 56.