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01 / State of play

The total activity index fell into negative territory in August following three consecutive months of expansion, falling 13 points to 47. R&M activity also lost some ground but managed to remain in expansionary territory at 54.

The residential index lost five points but remained above the no-growth bound at 52, while the non-residential activity index saw a 26-point fall into negative territory to 38. The civils sector, in contrast, stood well above the no-growth bound after its activity index added 18 points to 75.

The orders index remained in positive territory, despite losing four points to 57 in August. The tender enquiries index similarly lost four points to sit just below the no-growth bound at 48.

Both the residential and non-residential sector indices, however, lost momentum, dropping four points each to 58 and 54, respectively. The civil engineering index picked up by eight points to 68.

The tender enquiries indices for the residential and non-residential sectors both saw a contraction in August. The former lost three points to dip below the no-growth bound at 48, while the latter similarly lost four points to 45. The civil engineering tenders index, in contrast, marked improvement over the past month, gaining two points to 65. The tender prices index has remained on the expansionary side since January 2014, and August was no exception. Despite a two-point decrease in the past month, the index remained comfortably above the no-growth bound at 61. The employment prospects index fell into negative territory after dropping nine points to 44.

The share of respondents indicating no constraints to their activity picked up by 15 points in August, to 48%. This largely reflected the decrease in respondents citing bad weather as a constraint, down from 13% to zero. Insufficient demand remained the biggest obstacle, as reported by 24% of the respondents. Labour shortages and miscellaneous factors also declined in terms of significance, cited by 4% (10% in July) and 18% (21% in July) of respondents, respectively.

02 / Leading construction activity indicators

The total activity index fell into negative territory in August, following three consecutive months of expansion. After reaching a high of 60 points in July, the index lost 13 points to settle just below the no-growth bound at 47. The leading activity indicator is expected to recover to the no-growth bound in September and into positive ground by October, before slowing back down towards the end of the year.

03 / Material costs

The August survey results point to an acceleration in material costs for the residential and non-residential sectors. The highest band of the scale, incorporating cost growth of above 5%, grew to 21.4% (up 5.6 percentage points since May). While the 5.1-7% band saw a marginal decrease, the central 2.6-5% band expanded significantly, rising by 14.8 percentage points to 46.4% of respondents. Meanwhile, the share of agents experiencing cost growth of up to 2.5% fell to 17.9%, down from 31.6% in May. None of the respondents reported falling costs in August. Material prices for the civil engineering sector experienced a step change in August, with half of the respondents reporting falling prices for the first time since May 2018. The share of respondents reporting cost rises of 2.6-5% saw a proportional fall to 50%.

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 UK composite index saw an acceleration in its rate of expansion in August, gaining six points to 64. Six of the 11 UK regions and devolved nations stood above the no-growth bound, with seven seeing their indices decrease in the past month.

The West Midlands exhibited the highest index value of all regions and devolved nations in August, at 69, despite a six-point fall since July. Northern Ireland and the East Midlands were the only areas to experience a rise in their indices, gaining two points to 58 and four points to 62, respectively. The South-west exhibited the second-highest index, at 66, despite losing two points, while Wales placed third with 64, following no change from the previous month. The North-west was the only remaining region to stand in expansionary territory, at 57, despite an eight-point slide. 

Scotland’s index saw the largest fall of all regions and devolved nations and was the only one to move from expansionary to contractionary territory, losing nine points to 47. Yorkshire and Humberside held the lowest overall index of 36 for a second consecutive month, however, following no change. The North-east fell two points further away from the no-growth bound to 47, while East Anglia and the South-east similarly lost one and two points, respectively, to levels of 44 and 37.