Lower growth rate reported

SME construction companies reported the lowest rate of growth in business activity for four and a half years and the sector continued to report strong rises in average input prices.

SME construction companies reported the lowest rate of growth in business activity for four and a half years and the sector continued to report strong rises in average input prices, according to the 'PKF SME Index', a quarterly survey of 800 SMEs operating in the manufacturing, construction and service sectors.

Business activity for the sector was recorded at 51.3 in Q4 (where marks above 50 indicate expansion and marks below 50 indicate contraction) compared to a much higher 57.7 in Q3.

New orders figures stood at 52.1 in Q4 as opposed to 55.4 in Q3.

The survey respondents mostly cited the 'exceptional months in July, August and the first half of September' as the main reason behind the figures showing a downturn - 'now that the summer rush is over, trade is returning to normal'.

Input cost inflation remained high at 69.5 but this was less than Q3's figure of 77.3.

As in Q3, however, price increases in raw materials were again blamed - particularly stainless steel and glass.

Commenting on the findings of the PKF SME Index, Stuart Barnsdall, PKF partner for growing business, said: "This downturn in the construction sector is not unusual for the time of year, particularly after such a prolonged period of growth in the run up.

Over the summer months, record figures not seen for a year were reached and this, coupled with a normal seasonal downturn due to the weather, means these figures are not surprising.

"Having said this, with input costs rising consistently and more interest rate rises forecast, the downturn could be set to continue.".

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