Value of construction contracts have increased according to Barbour ABI

Value of contracts up by 10.6%.

A rise in new contracts awarded is driving growth in the construction industry, according to new figures released.

Barbour ABI’s Economic & Construction Market Review for July 2015 shows that despite the latest Office for National Statistics (ONS) figures showing a decline from the previous month, the value of contracts awarded is actually in rude health for the industry.

According to Barbour ABI’s data, June saw an increase in construction activity levels. Based on a three-month rolling average, the value of new contracts awarded was £6.2Bn, which represents an increase of 10.6% increase from May and an even bigger one when compared to June 2014.

In addition, the number of construction projects in the UK recorded in June increased by 17.1% from May.

A leading provider of construction intelligence services, Barbour ABI is the chosen provider of Construction New orders data to the ONS and the government’s Construction and Infrastructure Pipeline.

Output in construction seems to still be driven by new private housing, which experienced an 8.9% rise from the numbers recorded in May 2014, while infrastructure also enjoyed a huge year-on-year rise of 16.2%.

Within these figures, there was a huge spike in the value of commercial and retail projects awarded in June.

The figure, which stands at £1.2Bn, is double the figure recorded in May 2014 and it outstrips June 2014’s figure – again, based on a three-month rolling average – by 41%.

Barbour ABI’s lead economist is Michael Dall and he believes that a significant contract award has boosted these figures drastically.

As well as this though, he believes the figures released show “a broader shift in confidence.”

He said: “The award of Wood Wharf – a commercially-led ‘super project’ in Canary Wharf – was a significant contributor to last month’s spike.

“However, this major project is indicative of a broader shift in confidence and investment in property by UK businesses.

“Wood Wharf is one of the biggest commercial projects the construction sector has seen for some time, and developers just don’t make that level of investment without a clear recognition of demand.

“While the latest GDP figures showed a large increase in investment in transport equipment, a project of this size suggests businesses are also investing in their property portfolios, looking for space to continue their expansion.

“The stability of having a newly elected government may also be at play again, giving businesses confidence in the longer term.”

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