Strong month for Infrastructure

The latest statistics in the Economic & Construction Market Review have been released, showing a strong month for construction. In particular, infrastructure works, which reached a high of £1Bn – the first time in six months this threshold has been exceeded.

According to Barbour ABI, the total value of new contracts across construction reached £6Bn in August, a monthly increase of 28.9%. The growing value of contracts through the summer has brought a better outlook to the industry having struggled with conditions (both economic and meteorological) earlier in the year.

Looking more closely at the sectors, residential work continues to dominate workloads and during August contract values registered at £2.2Bn, accounting for more than a third of contracts awarded. However, this is still some way behind the recent peak of March 2018 at £2.4Bn.

Boosted by a number of large utilities contracts, infrastructure led the table of the biggest value contract awards across construction with five of the top ten projects for August being from this sector. The largest, the £1.8Bn Triton Knoll 900MW Offshore Wind Farm in the Greater Wash Basin off the Lincolnshire coast, involves 288 turbines which are scheduled to produce 900 to 1,200 MW of electricity. The award of this project, plus Project Two at the Hornsea Onshore Substation in Lincolnshire, contributed significantly to the East Midlands leading the regional position with 68.4% of contracts awarded within the infrastructure sector.

These awards are a keen indicator of growth in East Midlands currently, led by HS2 investment. Leading in Infrastructure awards, the East Midlands also leads regionally across all sectors too, with a contract award value of 28.8% of the UK total. This was followed by the South East with a 14%, boosted by the second largest contract award project – the M23 J9-J10 Smart Motorway Gatwick Junctions in Redhill in Surrey at £158.4M.

Commenting on the figures, Michael Dall, Lead Economist at Barbour ABI, said: “It’s been a positive month – every sector within construction is up month on month and it is great to see award values boosted by some big-ticket Infrastructure projects. Of course, it remains to be seen whether the better numbers are temporary as the industry continues to play catch up with the lost output from the start of the year, but these figures should still provide much-needed confidence and are hopefully a sign of a more durable upturn in demand.”

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