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Comment: Savills questions accuracy of construction output official statistics21st May 2012

Rainbow by Chee Kong Teo

According to Savills latest Commercial Development Activity report, total commercial development activity rose for a second successive month in April.

Growth of work on private sector projects remained strong in April - net balance at +18.3%. While in contrast, a renewed decline in public sector activity was recorded by April’s survey, with a net balance of -9.7% of companies noting a drop.

Around a quarter of panellists reported a rise in total commercial activity, compared with 17% that mentioned a decline.

The Total Commercial Development Activity Index, a net balance monitoring the overall performance of the UK commercial property sector, registered +8.1% in April, from +13.1% in March.

Future expectations
Commercial developers were mildly optimistic regarding the three-month outlook for activity in April.

Posting +5.5%, the net balance signalled the weakest degree of positive sentiment in three months.

Exactly 19% of companies expect activity to be higher in three months’ time, compared with 14% forecasting a decrease.
Anecdotal evidence provided by survey respondents suggested that general optimism was supported by expectations of new business wins.

A net balance of +8.1% of companies signalled a rise in total commercial activity.

Four of the nine monitored sectors posted a decrease in activity. Reductions were seen in all three public-based categories, as well as office fit-out.

Private new build projects rose at the strongest rate of all sectors, followed by private sector office activity.

Commenting on the March survey, Michael Pillow, Head of Building Consultancy at Savills said:

“Private sector development activity and confidence remained solid in April, raising further questions about the accuracy of the official statistics on construction output that contributed to the ‘double-dip’ in UK GDP last quarter.”

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