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Good but surprising news on contruction recovery?

Edward Harkins

New Member
I've posted this elswhere, and thought that SBF members might also be interested:

It's maybe a surprise for some people, but data from the monthly Purchasing Managers Index for Construction indicates that UK construction activity was strongly recovering in the first quarter of 2011. Residential building is specifically reported as having recovered from the slowdown last autumn and winter, and now growing particularly rapidly (and there’s scope for assuming the recovery might be stronger as early glimmerings might have been hit by the freeze in December.)

This authoritative and widely respected Index suggests that over the first quarter the construction industry was growing faster than its pre-crisis average.

Over the first quarter as a whole, the index for construction activity averaged 55.5 as compared with 50.8 in the final quarter 2010. Over 50 is taken as a signal of a reported increase in activity.

The sub-index for residential building hit 57.4 as compared with a 43.1 low in December 2010. Commercial building activity is increasing at a decent pace, though below its long-term average rate, and the civil engineering sub-index is at 58.5 compared with a long-term average of about 51.

On a disappointing note, official public data on construction indicates a weaker picture. The Office for National Statistics and Eurostat both report to an ongoing sharp contraction in January following that in December (of course official figures are notoriously prone to later large correction).

Big worry now has to be about the continuing collapse in consumer confidence being reported. The UK Coalition government’s draconian public sector cuts have already caused retailers like Dixon’s to warn the stock market on their profit outlook – largely based on their experience of fearful public sector employees on buying-strike and the fall-out from the large numbers already made redundant.

Even the optimistic Purchasing Managers’ Index employment fell for the ninth month in a row and input prices are close to all-time highs... and of course the inputs inflationary bogeyman is back in town.

edward harkins | LinkedIn