The value of new contracts across construction reached £6 billion in August, a monthly increase of 28.9%; providing evidence that the construction industry is bouncing back from its poor performance in the first quarter of the year.
The latest edition of the Economic & Construction Market Review from Barbour ABI shows that the residential sector continues to dominate and during August contract values were £2.2 billion, accounting for 36.2% of total contracts awarded. However, this is still some way behind the recent peak of March 2018 when £2.4 billion contracts were awarded.
The infrastructure sector saw award values exceed the £1 billion threshold for the first time in six months, with the current quarter being 6.8% ahead of 2017. 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 is the £1.8 billion Triton Knoll 900MW Offshore Wind Farm in the Greater Wash Basin. 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.
In fact, the East Midlands led regionally across all sectors, with a contract award value of 28.8% of the UK total. This was followed by the South East with a 14% share helped by the M23 J9-J10 Smart Motorway Gatwick Junctions in Surrey at £158.4 million.
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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