Construction orders turn upwards again

NEW ORDERS for work in the construction industry rose slightly in February, restoring a healthy upward trend after January's sharp fall, figures released yesterday by the Department of the Environment show, writes Robert Chote.

New orders totalled pounds 2,184m in February at 1990 prices and adjusting for normal seasonal influences. With the exception of December this was the highest figure since the end of the recession. Orders for housing and infrastructure work fell in February, but public and commercial orders rose sharply.

New construction orders in the three months to February were 14 per cent up on the previous three months and more than 30 per cent on the same period last year.

The figures provide further evidence that the economic recovery has built up momentum before this year's tax increases bite. But some doubt about the strength of recovery on the high street was cast by downward revisions to growth figures for the narrow money supply measure M0 - cash plus bankers' balances at the Bank of England.

M0 grew by 5.6 per cent in the year to March, according to the Bank. This compared with an earlier estimate of 5.8 per cent. The annual growth rate over the past three months was revised down from 7.1 to 5.3 per cent.

The figures had little impact on the financial markets, where there was some half-hearted speculation on an early interest rate cut. The FT-SE index of 100 leading London shares fell 10.2 points to 3,128.

Most construction firms surveyed by the Building Employers Confederation reported output unchanged in the past three months from the previous quarter. Sir Brian Hill, president, said 'only a limited improvement' was likely this year. 'It will be some time before we regain our potential to generate significant numbers of new jobs.'