Economic indicators for construction published last week suggested that the worst of the recession may have passed. But they also showed that civil engineering had dipped in April and May after consecutive monthly increases in the first quarter of the year.
Market intelligence firm Glenigan said planning applications and tenders increased by 32% and 27% respectively in May compared with February’s record low. It said that project starts would recover in the second half of 2009.
Most new work has come from small public sector projects and from jobs linked to major government projects.
In contrast, the first quarter upturn in the value of orders for civil engineering projects worth less than £100M lost momentum in May.
Glenigan’s comparative index showed civil engineering dipping from 140.2 in March to 128.4 in April and 87.8 in May.
Monthly rises in the first quarter were down to an upturn in roads and energy work, but the flow of transport projects worth less than £100M has dipped over the last two months. Utilities project starts also fell in May as a result of falling water sector orders.
Low but encouraging numbers
Glenigan is now forecasting that the value of underlying construction project starts during the second half of 2009 will be little changed on a year earlier. This is much lower than two years ago, but is encouraging after an estimated 24% year on year fall during the first six months of 2009.
Glenigan’s figures were matched by those from the Office of National Statistics which reported that new construction from £2.3bn in March and up on the February figure of £2.1bn. Its figures confirmed a decline in infrastructure orders from £634M in March to £514M in April.
Overall, orders in the three months to April 2009 still fell by 9% compared with the previous three month period.
Orders in the 12 months to April 2009 were down 29% compared with the previous 12 months and orders in three months to April 2009 were down 38% on the same period a year earlier.
A stabilising economy
Business lobby group the CBI said that the recession in the UK economy would persist until early 2010 with slight growth, but that the economy has stabilised.
It expects Gross Domestic Product (GDP), supported by low interest rates and higher public spending, to flatten out during the second half of 2009.
Up then down again
Construction starts increased last month but these figures hide a dip in civil engineering starts due to a downturn in the water sector.
- Tenders and planning applications in May increased 32%
- Construction orders in April were up £2.7bn