After shedding jobs faster than at any time in the past 12 years, construction companies now seem to expect the industry to take a turn for the better, writes Nevill Boyd Maunsell.
The headline Purchasing Managers’ index for construction activity perked up to 30.9 in March from an all-time low of 27.8 in February on a scale where anything under 50 indicates a decline.
House-builders were hardest hit, while civil engineering suffered less than other areas of activity.
New orders declined all-round, though.
“Respondents noted sharp reductions in client budgets, strong competition to secure new contracts, fewer customer inquiries and opportunities to tender, as well as a lower success rate on submitted bids,” said the Chartered Institute of Purchasing & Supply, which compiles the index with Markit Economics.
On the plus side for employers, the number of sub-contractors available for work rose faster than ever before. “Their rates fell steeply and the quality of their work rose markedly” said the report.
Companies that have remained optimistic throughout the gloom based their outlook on current contract negotiations, business investments and marketing activities.
“However, many companies simply believe that conditions cannot continue to deteriorate,” the CIPS noted.
Gemma Wallace, an economist at Markit Economics, said: “Before false hopes are raised of a stabilisation in the downturn of the UK construction industry, the recent fluctuating nature of these indices should be taken into account.
“As they remain at historically low levels, it is still too early to suggest that the sector has started on the road to recovery.
“Nevertheless, UK constructors remained confident that operating conditions will improve in the next year.”
CIPS director Roy Ayliffe highlighted the loss of construction jobs.
“Firms not only reduced contractors’ days, but also cut headcount at an unprecedented pace,” he said.