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Contractors seem to have started 2002 with a whimper rather than a bang. All the major survey indicators were down in January. The activity balance has turned from positive to negative, and the decline in tender enquiries has steepened slightly. Order books have also worsened, perhaps reflecting the fall in new orders reported by the DTI in December.

All regions displayed negative activity balances, with only four posting improved monthly results: north England, Yorkshire & Humberside, the West Midlands and north-west England. Seven regions experienced negative balances in the three months to January, although of the seven, three did record a monthly improvement in January.

Optimism seems to have evaporated regarding short-term employment prospects, although the balance on tender prices dropped only moderately as firms approach their review periods for the next financial year.

Provisional fourth quarter output data has just been published by the DTI, indicating that 2001 was quite a buoyant year for the construction industry as a whole. In constant prices, output rose 3.5% in 2001 compared with 2000, with increases in activity in all but three sectors – new private housing work, new private industrial work, and public housing repair, maintenance and improvement. The industry is not expected to perform as well this year, with our forecast of about 2%, and some analysts expecting a decline.