Construction industry revs engines in January

[edit] Contract awards in January jumped 50% from December

Contract awards in January jumped 50% from December as construction industry spenders attempted to kick-start the industry following the winter break, but they remained 14% down on the same period last year, according to the latest figures from Barbour ABI.

Notably, house-building contract awards were up by nearly 75% from December, giving a cautiously optimistic start for the residential sector after just just 133,213 private sector new homes were completed in 2023 according to the NHBC.

The news was not so good for Infrastructure, with awards down 6% compared with January last year and 17% down compared to December.

Last month Barbour ABI reported that spending on construction projects in the UK fell £11.1bn to £69.2bn in 2023, a 14% reduction from a record £80.4bn in 2022 despite inflated material costs.

Barbour ABI Consultant Economist, Kelly Forrest said:

“Given the struggles faced by construction in 2023, a weak start to 2024 would be disappointing. 26 construction firms have already collapsed in 2024, including Stewart-Milne Group, and the latest Red Flag Alert report from Begbies Traynor found that 47,477 firms were on the edge of collapse in the final three months of last year.

Industry watchers will therefore look closely to see if the 50% bounce back in spending is the start of an upward trend or a result of starting from a very low baseline.”

[edit] Health and industrial show positive signs

Health awards hit £0.5bn, 85% higher than in January last year and the highest level recorded since February 2022. Significant contract awards included design and construction work at the Royal Shrewsbury, Frimley Park and Florence Nightingale hospitals.

A new £100m medical manufacturing facility close to Hull and R&D facilities in Kettering boosted industrial awards, which at £0.8m posted a healthy monthly performance.

[edit] Education and Leisure

Totalling £0.4bn, education awards were 15% down annually but this was still 50% higher than in December and follows a 20% uplift in education awards during 2023 as a whole thanks to RAAC works and the School Rebuilding Programme.

2024 started on a more subdued note for commercial and retail, hotels, leisure and sport sectors, all of which continued to see awards decline after 2023's double-digit losses.

[edit] Applications in December

Looking ahead using the latest application data from December, Forrest added:

“December planning applications fell back from the November peak but remained significantly higher than the 2023 monthly average. At £9.5bn, applications exceeded the £9bn mark for only the fourth time in 2023, which could be a positive sign for those feeling bullish about the latest spending figures.”

--Barbour ABI 09:40, 16 Feb 2024 (BST)

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