The construction industry looks perky, and this time it’s not building state-funded follies
Not exactly Flaming June so far, is it? Up north, we’ve had one day of blazing sunshine — and being northerners, we complained it was too hot. Down south, you’ve had a continuous drizzle of dismal economic indicators. Inflation is up; growth forecasts have been slashed, in the IMF’s case by a whole percentage point to 1.5 per cent for 2011. Manufacturing output has fallen back for the first time in two years. New car registrations were down 1.7 per cent year on year in May and retail sales were 0.3 per cent worse than in April — when mortgage approvals were at their lowest level since 1993.
John Lipsky, the moustachioed man from the IMF, says the setback is temporary, driven by higher fuel and commodity prices, and George Osborne’s policies are on the right track. But the absence of economic momentum weighs heavy on the national mood. As ever, therefore, I feel impelled to seek out a relatively bright spot, which turns out to be the construction industry, where orders and job prospects have recently perked up.
Even that, admittedly, is a rebound from a horrific first quarter, when orders showed their sharpest fall since 1987 and 1,000 building companies went bust. For infrastructure projects, orders were down by almost half compared to the last quarter of 2010. But these swings are easy to interpret. A final spate of public sector contract work has now petered out, following a period in which it was barely possible to set foot on a college campus without falling over the scaffolding and every journey was impeded by roadworks. Now the impetus is back with the private sector. Banks are lending selectively to developers again — and though the margins and the small print are punitive, the underlying interest cost is still low.