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01 / THE STATE OF PLAY

Experian’s construction activity index remained unchanged at 46 in June - it has now been below the no-change mark of 50 in each month since November 2010. The non-residential sector was the only one to see its index decline, falling by three points to 43, a level not seen since May of last year. Meanwhile, the residential index rose by three points while remaining in negative territory at 45 whereas civil engineering enjoyed the biggest increase of seven points to 54, taking the index above the no-change mark of 50.

Orders were still below normal for the time of the year despite the orders index increasing by four points to 47. The civil engineering orders index decreased by seven points to 43. In contrast, the residential orders index saw a rise of four points to 43. The non-residential orders index also increased, going up by six points to 57. The index has been in positive territory since March 2010.

The percentage of respondents reporting no constraints on activity increased marginally to 19% but insufficient demand became less important as a restricting factor on activity as it fell dramatically from 60% to 48%. This is the lowest reading since November 2010. Bad weather as a constraint on business activity became more of a concern as 14% of firms reported this as an issue - its highest level since December 2010, whereas the proportion of respondents reporting finance as a limitation on activity levels remained unchanged at 16%.

In June the employment index rose by one point to 39 but despite this increase, firms are still indicating that they expect employment levels to decrease over the next three months. The employment index has been in negative territory since January 2008.

02 / LEADING CONSTRUCTION ACTIVITY INDICATOR

CFR’s Leading Construction Activity Indicator is predicted to increase by two points to 48 in July. The index is expected to slightly decrease by one point to 47 in August before rising again to 48 in September.

The indicator uses a base level of 50: an index above that level indicates an increase in activity, below that level a decrease.

03 / work in hand

In June 2012, around 59% of residential respondents reported less than three months work in hand while for non-residential and civil engineering firms this was 51% and 76% respectively. The non-residential sector saw the highest proportion of respondents (31%) reporting that they had enough work to keep them active for between three and six months.

Three months ago the civil engineering sector reported that zero work was readily available after six months. The latest figures for the sector show that about 14% of respondents are now stating that they have more than six months of work in hand. In June, the proportion of both residential (19%) and non-residential (18%) firms reporting more than six months work in hand remained higher than for the civil engineering sector.

04 / regional perspective

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.

The latest data shows that six of the 11 regions in the UK saw a rise in their index. The North provided the greatest increase as its index went up by seven points to 58.

Indices for both the West Midlands and Scotland increased by four points. Whereas the former region remained in negative territory at 42, the latter moved above the no-change mark of 50 to 52. Yorkshire & Humberside followed closely behind as its index rose by three points to 47. Both East Anglia (44) and the North-west (41) saw their indices edge up by one point.

The South-west saw the greatest decline in its index, as it dropped by six points to 52. Despite this fall the index remained in positive territory for the fifth consecutive month. Northern Ireland (33) saw its index decrease by four points while the East Midlands (43) index fell by two points.
Both Wales (46) and the South-east (55) saw no change in their indices.

As a whole the UK index, which includes firms working in five or more regions, declined by six points to 42 - its lowest level since April 2009.

This an extract from the monthly Focus survey of construction activity undertaken by Experian Economics on behalf of the European commission as part of its suite of harmonised EU business surveys. The full survey results and further information on Experian Economics’ forecasts and services can be obtained by calling 020-7746 8217 or logging on to .