03.03.2004

UK Construction continues to expand

With the CIPS reports on Construction, Manufacturing and Service industries now out, it is clear that the UK continues to grow and optimism rise as we head into 2004.

The only negative point is current order backlogs in the manufacturing sector, although some of this is a by-product of the expanded capacity that has been added in recent months. There are concerns though that the low dollar will have a knock on effect on the health of the export sector. The Stongest growth of UK exports was reported as Asia, with pressure on North America.

Roy Ayliffe, Director of Professional Practice at CIPS, said:“Purchasing Managers saw sustained expansion in the manufacturing economy this month, particularly in consumer and capital goods, although significant growth was headed off by slowing rates of output and new orders. Despite the strength of the pound against the US dollar, panellists still faced rising input prices as demand exceeded supply for some core materials such as metals.”

Construction is the main focus for the lifting world, and with the exception of House building, which is showing a slower growth trend, all sectors increased their rate of growth in February, compared to Januarys report.

The biggest pick up by far was in Commercial construction activity where new orders and forecasts of future activity, caused the Commerical construction index to leap from 56.1 to 61.5! The numbers that comprise the index, are based on anything below 50 showing decline, while above 50 indicates growth. Commercial construction languished in the low 50’s last year, but is showing early signs now of some momentum forming.

New construction orders as a whole also grew faster reaching 62.5 and future activity for all construction, reached a high of 79.9. This reflects the expectations for activity this time next year. Clearly a high proportion of the companies surveyed, believe that the construction market will be significantly up by 2005.

“Purchasing Managers saw strong growth across the construction sector in February, as companies stepped up purchasing and recruitment to support rapid growth in new business activity. Encouragingly, business confidence is at its highest since November 2002, with most construction firms expecting the current expansion to continue throughout the coming year” said Ayliffe.

All service sector results show continuing rises with the overall number being 59.5, and future expectations 78.4. Order/work backlog also continues to rise with a pick up in the number of long-term contracts that companies booked in the month. Employment in the service sector also rose and shortages in some areas are beginning to cause inflationary pressure.