SME construction sector back on track

Strongest rise in new business since Q4 2004 and employment growth is highest since Q4 2005.

Following a dip in fortunes last quarter, the SME construction sector bounced back in the first quarter of the year with construction companies reporting the sharpest rise in business activity of the three sectors monitored, according to the 'PKF SME Index', a quarterly survey of 800 SMEs operating in the manufacturing, construction and service sectors.

Business activity was the highest seen by the sector since Q4 2003 at 60.5, which was a marked increase on the previous quarters figure of 52.3 (marks above 50 indicate expansion and below 50 indicate contraction).

New orders were also strong at 60.7, reaching a high not seen since Q4 2004 - again this was a much stronger performance than the previous quarter when the figure was 53.8.

Most panelists put the rise down to increased market demand.

In line with the rise in new business the construction sector experienced the highest growth in recruitment of new staff, of the three sectors, in the quarter.

The figure was 54.3 and this was compared to the 49.1 figure recorded in Q4 2006.

Anecdotal evidence pointed to the winning of new contracts, resulting in an increased level of activity, as the main reason.

Commenting on the findings of the PKF SME Index, Stuart Barnsdall, PKF partner for growing business, said: "The sharp rises the construction sector has seen this quarter are not a surprise given the start to a new season and the ever increasing demand for housing and reconstruction across the UK.

"Having said this, bearing in mind last quarter's dip and yet another interest rate rise in January, such a stark increase in activity was by no means expected.".

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