Industry’s dramatic turnaround in fortunes 

The construction industry, which has been one of the hardest hit by the recession, has experienced a dramatic turnaround in Q1 2010, with productivity reaching its highest level since July 2007, according to the latest Bibby Financial Services Business Factors Index.
 
After a sharp fall in activity within the commercial and industrial sectors, combined with a period of low activity at the start of the year, stalled further by the severe weather in January, the construction sector flourished in February and March, leading to an increase in optimism among construction owners and managers.
 
The Index shows that:
The majority (27%) of construction firms feel their business is steady and has experienced little change in the current economic climate, which compares with just 15% in the previous Index, suggesting that businesses in the industry are feeling more stable 
One in five (21%) construction owners and managers believe their business has never been in better shape or has actually benefited from the recession – a slight increase from 17% in the last survey and the highest percentage across the sectors which reinforces the construction industry’s position as the best performing within the Index
Almost half (48%) feel that conditions in the construction sector are better than they were six months ago, the most positive of all the sectors, suggesting the construction industry feels it has experienced the greatest level of recovery in the last six months
 
The increase in output within the sector is supported by research from the monthly CIPS/Markit construction Purchasing Managers’ Index (PMI), which shows that the sector returned to growth for the first time in more than two years.
 
However, despite promising signs of growth in the industry, responses from owners and managers of construction firms are mixed when questioned about when they expect signs of recovery to appear and caution underpins further growth.
 
Indeed, the Index shows that:
A third (34%) predict this will not occur for their construction business for at least a year
However, almost three quarters (70%) of firms in the industry agree that recovery of the sector will remain in line with that of the wider economy 
A significant majority (76%) stated they are managing suppliers more carefully to prepare their business for recovery, while 68% are cutting costs, indicating that key measures have had to be made to stabilise their business.
 

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