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01 / State of play

In November, the total activity index and the R&M index both fell. The growth in total activity slowed a bit, as the index ticked down one point to 53. The repair and maintenance (R&M) index also declined by two points, staying in negative territory for the second month running.

The orders index ticked up by two points to 65, but the tender enquiries index dropped by eight points back to its August level of 55 points.

The activity indices for the separate construction sectors showed mixed results in November. The residential sector index remained unchanged at the level of 56, but the non-residential one ticked down a point to 51 points, inching ever closer to the no-growth level. The civil engineering index lost nine points to 41, indicating a contraction in the sector in November.

The employment prospects index continued its slight downward trend started last month and lost another three points to just 51. This trend is supported also by the latest labour market statistics, which indicate a decline in jobs in the construction industry.

November’s figures show that nearly 43% of the respondents reported no activity constraints, a much larger share than that in October (32%). This result is mainly due to the drop in respondents reporting insufficient demand (from 34% in October to 25% in November) and those reporting financial constraints (from 18% in October to 11% in November). On the other hand, there was a slight increase in the percentage or respondents reporting labour shortages (10.6% versus 8% last month).

02 / Leading construction activity indicator

CFR’s Leading Construction Activity Indicator lost a point, falling to 53 in November. Despite this marginal fall, the indicator has remained relatively stable over the past four months and is expected to continue its steady path around the level of 54 in the next four months.

03 / Material Costs

The latest figures for material costs indicate mostly positive developments for the residential and non-residential sectors. On one hand, the percentage of respondents reporting increases in material costs above 7.5% fell to 20%, and some respondents (2.2%) even reported a decrease in material costs. On the other hand a somewhat larger share of respondents reported an increase in material costs between 5.1% and 7.5%.

In the civil engineering sector, material costs slightly increased in November. The percentage of respondents who saw a rise in material costs between 2.6% and 5% climbed from 66.7% to 75%. The remaining 25% of firms reported increases of 2.5% or below.

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 largest movement in the regional indices in November was recorded in Yorkshire and Humberside, whose index dropped 20 points to 69. Despite this considerable fall, the region still remains the strongest performer in the UK. Bringing up the rear of the pack since July of this year, the West Midlands’ index lost five points to 34.

Among the rest of the regions, the North-east, the North-west and the South-east all lost five to six points in their indices, whereas the East Midlands, the South-west, Scotland and Northern Ireland all reported slight improvements. At 61 points in November, the UK index recorded an increase for the second month running.