Britain's best source of building product information

This year is expected to finally mark a turn-around in the civil sector according to the Construction Products Association. The CPA expects investment in the water and energy sectors to lead to a sustained recovery in output. That these projects are entering the cycle is evident by a glance at the early planning stage of MAP Glenigan’s statistics for the civil sector, where the average value of work has doubled over the last six months. EMAP Glenigan’s statistics also shows that civil orders are relatively healthy, which is in direct contrast to waning Department of Trade & Industry data but this is due to a different collection method.

EMAP Glenigan’s figures include long term frameworks that are not filtering down to the food chain but work coming up for grabs is healthy according to the tender stage data. Overall output – different to orders - is expected to have risen six per cent to £7,726 million according to research from MBD, which estimates decline in civil output between 2002 and 2005 to be 17 per cent. Between 2007 and 2011, MBD expects output to reach £8,392 million, which would represent exactly the turnaround that many in the civil industry need.

The value of proposals for building projects entering the system continues to fluctuate. In January, EMAP Glenigan identified £6.5 billion-worth of work at early planning and the 12-month rolling total dipped after the previous month’s rise. This sort of variation has typified the past few months and makes identifying a trend difficult but the final month of 2006 did produce acceleration in industry activity according to the Chartered Institute of Purchasing & Supply’s construction index. There is a more obvious trend in the plans approved stage, where, despite £1.3 billion-worth of work given the green light, the graph fell for a fifth successive month.

The value of building work coming up for grabs retreated for a second month in a row in January as more forecasts flood out suggesting tender prices will outstrip general inflation. EMAP Glenigan’s data shows that £2.1 billion-worth of building work was up for grabs in the first month of 2007 but this was well down on a year ago and the 12-month rolling total fell again. As January 2006 produced a near record total this should not necessarily be indicative of a wider trend but tender prices are still surging according to consultants EC Harris. In 2006, input costs rose 5.4 per cent and by 2.7 per cent in the final quarter of the year alone.

After two months of decline, building orders rose again in January despite the lowest total for a quarter of £2.9 billion according to EMAP Glenigan. Prospects for the future are cool at the Federation of Master Builders, representing smaller firms, in a state of trade survey but the Construction Products Association still expects overall industry growth to outpace the general economy over the next three years. More historic data from the Department of Trade & Industry shows orders in the 12 months to November 2006 ahead eight per cent on the same period a year ago although consultant Savills’ PMI development index showed commercial activity slowing.

Residential orders are firm despite January producing the lowest total for four months with £900 million-worth of work awarded or started. According to the latest state of trade survey from the Federation of Master Builders, which represents smaller contractors, housing association and local authority work is weak. The FMB also reports that private sector repair and maintenance is flat, while the Construction Products Association expects rising interest rates to put dampen future workloads. This is already happening according to the Department of Trade & Industry with private housing orders off four per cent in the year to November 2006 although public sector work ballooned 46 per cent in the same period – a trend that is likely to be benefiting larger contractors and not FMB members.

Industrial orders have slipped form their recent six-month high after EMAP Glenigan recorded £106 million-worth of work let in January. This recent growth is reflected in Department of Trade & Industry figures for the year to November 2006, when industrial work rose 19 per cent on the preceding 12 months.

The future remains buoyant though with the Construction Products Association expecting extra investment in regional distribution facilities to help sustain orders. Earlier in the pipeline, warehouse development activity is also expected to continue to increase in the first quarter of 2007 according to consultant Savills’ PMI development activity.

After three months of decline, commercial orders revived with £939 million of work booked in January according to EMAP Glenigan.

The Construction Products Association cites a strong office market as driving growth in its latest forecasts, while Department of Trade & Industry data for the year to November 2006 shows commercial orders up 35 per cent on a year ago. A state of trade survey for the fourth quarter of 2006 from the federation of Master Builders shows commercial orders as the strongest. With take-up of office floorspace at a record level last year in the City of London according to the latest Ingleby Trice Kennard research, this should help sustain workloads in the coming months.

Medical orders have slumped after EMAP Glenigan recorded £145 million-worth of work let in January. A recent dearth of major Private Finance Initiative (PFI) schemes has exacerbated this dip and after a poor total in December, the graph has slipped to a 10-month low.

This dip is not expected to last according to the Construction Products Association (CPA). After two years of decline in this sector, the latest forecasts from the CPA suggest that health-related output will rise modestly in 2007 and 2008 due to PFI work with traditionally funded work subdued through to 2009.

A £231 million Building Schools for the Future (BSF) project in Preston and a handful of awards for other smaller major projects drove education orders up to an all-time high of £675 million in January.

This fillip ended a two month dip in the 12-month rolling total that is evident in more historical date for Public non-housing orders, including education, which fell 11 per cent in the year to November 2006 according to the Department of Trade & Industry. Despite this and expecting more education work to be delivered through BSF or the Private Finance Initiative, the Construction Products Association is confident of the future for this sector and still expects traditionally funded work to remain stable.

Confirmation of an order placed for a £60 million museum in Glasgow meant that January produced the biggest tranche of leisure work since October 2002.

With £185 million-worth of leisure work let in the first month of 2007 according to EMAP Glenigan, the 12-month rolling total is at its highest level since the end of 2004. The Glasgow scheme is a city council project but this is not indicative of a wider growth in public spending on leisure construction work.

According to consultant Savills’ PMI development activity index, public leisure and retail work was the only area of nine surveyed to contract in December, when overall state activity stagnated after 11 months of growth.