Construction Sector SMEs Show Continued Growth

The construction sector's small and medium-sized businesses continue to buck the downward trend of the UK economy in the first quarter of 2003 with buoyant levels of business activity and new orders, according to the 'PKF SME Index', a quarterly survey of 800 SMEs operating in the manufacturing, construction and service sectors.

Output was shown to have fallen slightly from the last quarter of 2002 but still showed signs of growth, with new orders expanding at a similar rate. The reasons to be cheerful cited by the respondents included new partnering contracts, end of financial year spending, new commercial starts and an apparent relaxation in the local authority procurement process.

Levels of employment also continue to grow - in sharp contrast to the decline in the manufacturing and service sectors. In addition to the expected reasons of 'increased orders', and 'new work started', some were also taking on staff in anticipation of future work, perhaps signalling a longer term confidence in their sector.

Nick Winters, Partner at PKF, commented on the findings: "Compared to the rest of the economy, the smaller end of the construction sector is holding up well. However, the continuing steep rise in input prices - particularly those related to oil - is affecting the sector's profitability and they must all be wondering how much longer they can continue to buck the downward trend in the economy."

Copies of the PKF SME Index, quarterly performance survey of small and medium sized enterprises are available free by emailing amanda.young@uk.pkf.com

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