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The rate of growth of construction activity in February slowed to its lowest level since May last year. The activity index, which has been falling since October 2002, reached 53*. The main reason for this decline was slowing demand in the wider economy, although unusually good weather meant that contractors were able to get on with their work in hand.
During the month, all construction firms felt the pressure of rising material costs. These were highest for those carrying out building work – four in 10 reported an annual increases of more than 5%; the equivalent figure for civil engineering firms was three in 10.
According to Construction Forecasting and Research's leading construction activity indicator, which combines all the graphs on this page and projects them three months into the future, the outlook is healthier than the February snapshot suggests. Activity is expected to rise to 55 in April. This rise will be caused mainly by an increase in orders and tender enquiries in the residential and non-residential sectors.
Construction firms are less optimistic about employment and tender prices over the next three months as, although they are set to rise, their rate of growth is expected to be slightly weaker.
According to CFR's latest forecasts for Great Britain, construction output will to rise 5% in 2003, largely driven by public sector and infrastructure activity.