Key Statistics – 5th June 2015

Summarised below are the key economic and construction market statistics released over the last week. Previous weeks’ summaries have been retained below.

5th June 2015

Construction

• The May Markit/CIPS PMI saw some rebound from last month’s near two year low, but was still the second weakest reading in two years. Output growth remained subdued, attributed to lower new business gains in the run-up to the election. However business optimism reached a new nine year high, and staff numbers increased at the fastest pace so far this year. Sub-contractors’ prices continued to rise at record rates, spurring job creation as contractors boost their direct workforce to reduce reliance on subcontractors. 

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Economy

 

• UK car registrations rose 2.4% year on year in May, in a sign that UK consumer spending and spending remains strong. The figures from the Society of Motor Manufacturers and Traders also show that during the first five months of the year registrations were 5.7% higher than during the same period of last year. 

 

• May was the slowest month of growth so far in 2015 for the UK services sector, according to the Markit/CIPS PMI survey, however growth in the workforce remained strong. The PMI covering the manufacturing sector showed an increase in growth between April and May, but the pace of expansion continues to be held back by weak export demand.  

 

29^th May 2015

 

Construction

• The value of projects starting on site fell by 10% compared to a year ago during the three months to May, according to Glenigan data. Private housing saw strong growth, however non-residential and civil engineering activity slumped, in a sign that the election and its immediate aftermath delayed investment decisions. The figures include projects worth between £250,000 and £100 million.

 

• The number of new home registrations was well ahead of a year ago during the three months to April, according to NHBC statistics. 41,307 homes were registered during the period, up 20% from 34,451 a year ago. The Capital saw a sharp 30% drop in registrations, alongside the North East as the only two regions to see a decline.

 

Economy

 

• Business investment returned to growth in Q1 2015, having weakened during the second half of last year. Business investment was 3.7% higher than a year ago and 1.7% up on the previous quarter. Investment into dwellings and ‘other buildings and structures’ were up 4.0% and 2.4% on a year ago respectively.

 

• UK car production in April was 3.8% lower than a year ago, as falling exports more than offset a rise in cars produced for sale in the UK. 

 

15^th May 2015

 

Construction

 

• Output in the construction industry fell by 1.1% in the first quarter of the year compared to 2014 Q4, and by 0.3% compared to a year earlier, according to ONS estimates. This was the first year on year fall since 2013 Q2. The public housing, private housing and commercial sectors dragged new work output 1.7% lower than the previous quarter. New work output was down by 0.1% compared to a year ago; again due to falls in public housing and commercial work, whereas private housing output remains 8.3% up on a year earlier. The industrial and infrastructure new work sectors both saw growth compared to the previous quarter and to a year ago. Repair and Maintenance activity fell by 0.2% on the previous quarter and by 0.7% on a year earlier.

 

• The 2015 Q1 Construction Trade Survey, compiled by the CPA, found that construction activity rose for the eighth consecutive quarter, with large contractors, SMEs, civil engineers and product manufacturers all recording growth.

The survey also found:

• Among building contractors, a positive balance of 50% reported a rise in output. This balance was 54% for private housing and 23% for commercial output.
• On balance, 9% of building contractors reported a fall in both housing and non-housing repair and maintenance output in Q1.
• Public housing new orders fell in Q1 according to a balance of 45% of  building contractors.
• 63% of firms reported rising labour costs and 81% say materials cost rose; in both cases this was higher than the previous quarter.
• 59% of building contractors reported difficulties recruiting plasterers, up from 31% in the previous quarter. 56% reported difficulties recruiting bricklayers, down from 70% last quarter.

 (The Construction Trade Survey encompasses trade surveys conducted by the CPA, NFB, NSCC, CECA, UKCG and FMB)

 

Economy

 

• The positive employment trends seen over the last year and a half continued during the three months to March. The UK employment rate rose to 73.5%, higher than at any point since at least 1971. The unemployment rate fell to 5.5%, the lowest since mid-2008. Average earnings, excluding bonuses, rose by 2.2% on a year earlier. This was up from a rise of 1.8% in the previous month, and the strongest growth since mid-2011.

 

• GDP growth picked up to 0.4% in the three months to April, from 0.3% in the first quarter, according to estimates from the National Institute of Economic and Social Research. They continue to forecast growth of 2.5% for 2015 as a whole.

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1^st May 2015

 

Construction

• Figures released by The Insolvency Service suggest strong improvements in the financial fortunes of construction firms last year. The number of firms entering administration in 2014 fell by 29%, the number of Creditors Voluntary liquidations was down 13%, and compulsory liquidations fell by 20%. Data for 2015 Q1 shows further falls in administrations, which were down 27% compared to 2014 Q1. The number of bankruptcies of those self-employed in construction also fell, by 18%.

 

• Mace has released unchanged tender price forecasts for the next three years. Excluding London, prices are forecast to rise by 4.5% this year, before easing to 4.0% in 2016 and 2017. Prices in London are forecast to rise by 5.5% this year, before easing to 4.0% next year and 3.5% in 2017.

 

Economy

• UK GDP growth slowed to 0.3% in the first quarter, dragged back by weak production and construction output and an easing in service sector growth. Output from services, which accounts for almost 80% of UK GDP grew by 0.5%. This was down from an above trend rise of 0.9% in the previous quarter. Output in production was estimated to have fallen by 0.1%. The preliminary estimate (which will likely be revised) of construction output was of a 1.6% decline, marking the second consecutive quarter of contraction.

 

• Two headline measures of consumer confidence offered mixed views during April. The YouGov/CEBR tracker found that consumer confidence fell between March and April, with confidence now lower than the level of a year ago. By contrast GfK’s index found consumer confidence unchanged in April, remaining equal to the highest level for 12 years.

 

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24^th April 2015

 

Construction

• Skills shortages are the biggest drag on construction growth, according the 2015 Q1 Construction Market Survey by the Royal Institution of Chartered Surveyors (RICS). 63% of their surveyed members reported skills shortages as having impeded growth in the first quarter of 2015. The proportion citing material shortages as a hindrance was lower at 45%, down from 60% in the survey covering 2014 Q4. Surveyors remain optimistic about the outlook for growth, with a net balance of 79% expecting further rises in workloads over the next 12 months; the average expectation for growth in 2015 was 3.8%.

 

Economy

• UK retail sales dipped between February and March this year, but the longer run trend remains positive, according to ONS data. The quantity of goods bought in March was 4.2% higher than March 2014; though the amount spent increased by just 0.7% over the same period, reflecting low inflation and price competition by retailers.

 

• Gross mortgage lending picked up to £16.5 billion in March, a 21% rise compared to February, according to The Council of Mortgage Lenders. Subdued levels of approvals during January and February meant that 2015 Q1 saw lending decrease by 12% from 2014 Q4 and by 3% on a year earlier. However in March alone lending was 7% higher than a year earlier, suggesting that a slump in mortgage lending may be coming to an end.

 

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17^th April 2015

 

Construction

• The latest Construction Market Survey by the Royal Institution of Chartered Surveyors (RICS), found that 63% reported skills shortages as having impeded growth in the first quarter of 2015. The proportion citing material shortgages as a hindrance was 45%, down from 60% in the survey covering 2014 Q4. Surveyors remain optimistic about the outlook for growth, with a net balance of 79% expecting further rises in workloads over the next 12 monhts; the average expectation for growth in 2015 was 3.8%.

 

Economy

• UK retail sales dipped between February and March this year, but the longer run trend remains positive. The quantity of goods bought in March was 4.2% higher than March 2014; though the amount spent increased by just 0.7% over the same period, reflecting low inflation and continued price competition by retailers. 

• period, reflecting low inflation and continued price competition by retailers.

 

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10^th April 2015

 

Construction

• Construction industry output contracted sharply in the three months to February according to ONS statistics, dragged back by deep falls in R&M work and reduced levels of private housebuilding. Output fell by 3.2% compared to the previous three months, with new work output dipping by 0.3% and R&M output declining by 7.7%. This dragged R&M workloads lower than a year earlier for the first time since July 2013. New work (+1.3%) and All work output (+0.3%) remained ahead of a year ago, though in both cases this was the weakest annual improvement since June 2013.

 

Economy

• UK industrial production remained flat during the three months to February. UK industrial production was down 0.2% on the previous three months and up 0.7% on a year earlier. Manufacturing, the main sub-sector, was up 0.1% on the previous three months and 1.8% up on a year earlier.

 

• Pay for new permanent hires rose at the fastest rate for six months in March, according to a survey of recruiters.  The KPMG/REC Report on Jobs found that hiring of both permanent and temporary staff continued to grow at a marked pace during the month. Numbers of job vacancies rose, while availability of candidates fell, continuing recent trends that have stoked rises in starting salaries.

 

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3^rd April 2015

 

Construction

• The April Glenigan Index, covering 2015 Q1, found the value of construction starts unchanged on a year earlier. The value of non-residential building starts fell by a mild 1%, the first drop since July 2013, as new commercial activity weakened. Residential starts were flat on a year earlier and civil engineering edged up 3%. Starts failed to see further growth after rapid expansion this time last year; the first quarter of 2014 saw activity rise by 22%, fuelled by a 33% increase in residential starts and a 20% rise in the non-residential sector.

 

• Construction output grew at a weaker pace in March according to the Markit/CIPS Construction PMI, with civil engineering growth in particular easing. Job creation continued during the month, but at the slowest pace since December 2013. However the survey found 57% of respondents forecasting a rise in output over the next year against just 3% expecting a fall, equating to “the strongest degree of construction sector optimism for just over nine years”.

 

Economy

• UK labour productivity fell in the final quarter of 2014 according to ONS statistics, continuing a concerning long term trend of no growth in productivity since the start of the economic downturn in 2007. Output per hour worked fell by 0.2% from the third quarter; and over 2014 as a whole rose by just 0.1%. Output per job saw a slightly higher rise of 0.4% due to workers working more hours on average. The ONS stated that an “absence of productivity growth in the seven years since 2007 is unprecedented” in records going back to 1948.

 

• In the construction industry, output per hour increased by 3.1% in 2014. Output per job increased by 5.7%, again due to workers working more hours on average. It should be noted that estimates for the construction industry are experimental statistics.

 

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27^th March 2015

 

Construction

• The number of building apprentices taken in on Scotland increased for the second consecutive year in 2014. 1,553 apprentices were registered during the calendar year; this is up 20% from the nadir in 2012 but remains 43% on the number registered in 2007. The latest statistics covering England, covering the academic year to July 2014, showed a 22% drop in apprenticeship starts related to construction, planning and the built environment.

 

Economy

• Mortgage approvals picked up in February to a five-month high according to the British Bankers’ Association, in a further sign that a slowing in housing purchasing through the second half of 2014 has now bottomed out. However the total of 37,305 mortgage approvals in February was down 20% on the same month last year.

 

• Retail sales grew strongly in February, with the quantity of goods bought rising by 0.7% compared to January. This contrasts with a previously released survey by the CBI which showed retail sales growth easing in February to its weakest since November 2013. However the latest CBI survey showed a rebound in March.

 

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20^th March 2015

 

Construction

• The 2014 Q4 HBF/Glenigan Housing Pipeline found that permissions in principle for over 195,000 new homes in England were granted in 2014, up 12% on the previous year and 39% on 2012. The number of permissions for private homes was up 23%.

 

Economy

• The UK unemployment rate was 5.7% during the three months to January, down from 6.0% in the previous three months and 7.2% at this stage a year ago. Average weekly earnings, excluding bonuses, rose by an estimated 1.6% compared to a year ago, representing a real rise in wages due to current low inflation, which stood at 0.3% in January according to the CPI measure.

 

• During the current tax year so far, government borrowing has fallen by £8.8 billion, according to the ONS. From April 2014 to February 2015, public sector net borrowing excluding public sector banks (PSNB ex) was £81.8 billion; a decrease of £8.8 billion compared with the same period in 2013/14. The running total has been boosted by rising income tax receipts from self-assessment in January and February.

 

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13^th March 2015

 

Construction

• Construction output continued to weaken during the three months to January 2015 according to ONS estimates. All work output declined by 2.8% compared to the previous three months; pegged  back by a 7% drop in R&M output. New work output was flat, with rises in commercial and infrastructure output offset by contraction in the housing, public non-housing and industrial sectors. Compared to a year earlier output was up by 2.4%; slower than the prevailing rate of expansion in the UK economy as a whole after having outpaced other sectors over the last eighteen months.

 

Economy

• Britain’s high streets lost shops during 2014 at almost three times the rate in 2013, according to research by PwC and the Local Data Company. Across retailers with multiple premises in the 500 town centres studied, there were 5,839 closures and 4,852 openings, a net decline of 987 shops. This compares to 371 net closures in 2013. Leisure, beverage and food premises fared well during the year, as did charity shops, pound shops and betting shops. However this was more than offset by closures of traditional retailers such as clothing and shoe shops, and of service retailers such travel agents and hairdressers.

 

• Manufacturing output during the three months to January rose by 0.4% compared to the previous three months, to 2.6% higher than a year earlier. Combined output of the UK’s production industries, including manufacturing, was flat on the previous three months and up 1.1% on a year earlier.