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01 / The state pf play

Although some light was visible at the end of tunnel in March – the construction activity index showed a slight easing in the rate of decline – industry conditions deteriorated marginally in April. The seasonally adjusted index fell two points to 37 to indicate a small acceleration in the rate of contraction. The non-residential (38) and civil engineering (28) sector activity indices fell the same amount and the residential index edged down by a single point to 40.

The index for tender enquiries fell for the first time since October 2008, down five points to 45. Order books were also below normal as the orders index dropped to 37, its lowest level since October 1992.

The employment index fell for the first time since the start of the year to reach 31, suggesting that firms’ worries about employment prospects are deepening. The civil engineering tender prices index fell by seven points to 36. With the civil engineering tender price index remaining under 50 since last July, this indicates that tough trading conditions are continuing to force firms’ prices down.

02 / Leading construction activity indicator

(See graphic attached)

03 / labour costs

About 41% of residential and non-residential firms reported that labour costs had fallen from a year earlier. This is in contrast with three months ago when none of the firms suffered a fall in labour costs. Another 26% of those active in both sectors reported labour cost inflation of between 2.6 and 5%, 13% experienced cost increases of more than 7.6%. Only 5% reported that labour costs had risen by between 5.1 and 7.5% compared with 20% three months earlier.

On the civil engineering side, a much smaller proportion of firms (25%) experienced a decrease in labour costs. About 63% of respondents operating in the sector said labour cost inflation was between 2.6 and 5%, whereas none of the firms reported it to be above 5.1%. The remaining 13% indicated that labour cost increases were below 2.5%.

(See graphic attached)

04 / Regional perspective

Increasing by three points to 50, the North was the only region to be at a point where it was stable in terms of construction activity levels and outlook. The remaining 10 regions’ indices lay below the 50 mark.

The South-east (45), South-west (38) and North-west (30) all increased their indices by a single point. The North-west was still, however, the most depressed region. Northern Ireland rose two points to reach 41.

Wales’ index suffered the largest fall of any region with a drop of six points to reach 48, while Scotland fell five points to 42. Both the East Midlands (38) and Yorkshire and Humberside (40) suffered marginal falls of a single point.

East Anglia (48) and West Midlands (37) were the only regions not to change their indicators from the previous month.

In April, the UK indicator, which is made up of responses from firms operating in more than five regions, also remained steady from the previous month at 42.

Experian Business Strategies’ regional composite indicators 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 region’s industry.

(See graphic attached)