SME construction sector growth keeps on building

The SME construction sector continued to perform strongly during the second quarter with improved output, levels of new business and employment, according to the PKF SME Index

Employment levels still strong 20 July 2005: The SME construction sector continued to perform strongly during the second quarter with improved output, levels of new business and employment, according to the 'PKF SME Index', a quarterly survey of 800 SMEs operating in the manufacturing, construction and service sectors.

Output in the second quarter of 2005 was 57.6, up from 53.9 in the first quarter (where marks above 50 indicate expansion and marks below 50 indicate contraction).

The level of new business orders was also up from 59.3 in Q1 to 60.3, considerably above the UK SME average of 52.7 and in sharp contrast to the SME manufacturers' fall in new business orders to 48.9.

Most respondents said that they were either starting work on new contracts or had secured new work.

Not surprisingly, employment levels in the sector continued to rise at 55.8, contrasting sharply with the manufacturing sector which recorded its third successive quarterly drop (48.3).

Input cost inflation continues to rise although it has eased considerably from 68.3 in Q1 to 56.4 in Q2.

While the costs of oil, steel and PVC have softened slightly, costs for aggregates and bitumen continue to rise.

Stuart Barnsdall, partner specialising in growing businesses at PKF, commenting on the SME Index findings, said: "SME construction companies are still the best performing sector within the PKF SME Index in spite of the slowdown of the residential housing market".

"The combination of massive regeneration and affordable housing projects to achieve the government's Sustainable Communities Plan together with the London 2012 Olympics means that the construction sector can probably look forward to a long period of growth - particularly in the South East.".

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