Market conditions continued to improve in the second half of last year, according to research carried out by the Building & Engineering Services Association.

More firms acknowledged an increase in orders and enquiries compared with six months ago, while half reported a rise in their turnover levels. Member optimism regarding future prospects was also seen to have strengthened, while the number of firms recruiting apprentices and trainees rose modestly during the period.

There were indications that the recovering commercial environment meant that margins had ceased to fall – although increases in labour and materials costs were becoming a cause for concern for 33% and 63% of respondents, respectively.

The research also revealed that levels of both direct employment and the use of agency labour had risen – the former for the first time in the lifetime of the survey – and that these trends were likely to continue during the next six-month period.

Only in the domestic heating sub-sector were market conditions reported to have worsened, with a decline indicated in both order books and enquiries.

B&ES chief executive Roderick Pettigrew (pictured) pointed out that this was the second successive B&ES survey to have painted a relatively bright picture of prospects across building engineering services and, by implication, the construction industry as a whole.

“Encouragingly, our findings appear to be in line with those of other surveys carried out recently in adjacent sectors, which taken together provide evidence of a sustained – if still modest – process of recovery,” said Mr Pettigrew.

Although issues surrounding late payment and poor margins continued to have an adverse effect on some businesses, Mr Pettigrew considered it significant that members were becoming less concerned about client and main contractor insolvency – “yet another positive indicator”, he suggested.

He added that the collection of market statistics was of key importance to industry as it enabled individual firms to benchmark their performance against the sector as a whole, and that the findings of the B&ES survey would be used by the Confederation of British Industry in respect of its own pan-industry research.

The findings can be found at www.b-es.org.