This month, Experian Business Strategies reports that May was a bumper period for construction activity. However, labour shortages are proving irksome, and growth is set to wind down over the next quarter …
Activity levels in May rose at their fastest rate since the beginning of the year. However, 56% of firms reported constraints on activity, with nearly one in five firms reporting that labour shortages became an increasing problem in May.

Orders and tender enquiries remain relatively robust and firms have become more optimistic about future tender prices, although this positive outlook does not extend to employment prospects.

The construction industry remains relatively robust across all UK regions, with Wales and the East Midlands standing out, with high positive index figures for both activity and order books. The highest activity level was in Wales, where the index measure reached a three-month peak of 82. The nearest runner-up was Scotland, with 65.

Growth in the UK's construction industry is expected to slow over the next three months according to Experian Business Strategies' Leading Construction Activity Indicator, which incorporates a range of factors to assess the industry's prospects over the next quarter. The indicator is set to fall until September.

This is consistent with our forthcoming UK construction forecasts, which show that the construction boom is almost at an end. Following growth of 8% in 2002, output growth is set to moderate to 5% in real terms this year and to 2% in 2004. The more subdued outlook for the industry is down to a drop in the amount of work coming from the private sector.

The survey is conducted monthly among some 800 firms throughout the United Kingdom and the analysis is broken down by size of firm, sector of the industry and region. The results are weighted to reflect the size of respondents. In addition to the results published in this extract, all of the monthly topics are available by sector, region and size of firm. In addition quarterly questions seek information on materials costs, labour costs and work in hand.

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Postscript

This an extract from the monthly Focus survey of construction activity undertaken by Experian Business Strategies 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 Business Strategies' forecasts and services can be obtained from: telephone - 0870 196 8263; website - www.constructionfutures.co.uk

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