UK Construction contract spending up 69 percent at the start of 2025

UK Construction contract spending is up 69% in the first month of the new year of 2025.

• Positive news following a bleak purchasing managers’ index (PMI Index) report in early February
• New construction orders reached nearly 8.4bn in January
• Residential contracts up £900billion on December
• Infrastructure projects remain a key comment in 2025 predictions

Spending on new construction orders reached nearly 8.4bn in January in an upbeat start to the year for construction – a 69% increase on December. The analysis follows analysis in the last month of the year from Barbour ABI that contract awards were up 15% up in 2024.

The figures provide a silver lining after the S&P Global purchasing managers’ index (PMI) showed a fall in on-the-ground construction output in January.

The residential sector bounced back from a disappointing finish to 2024 to see a January total of just under £2.5bn, up £900million on previous month. A £180million development at Devonshire Garden in Cambridge led the surge with Morgan Sindall set to carry out the works.

Meanwhile infrastructure awards were up 7% on previous month and 13% on same month last year. The renewable energy sector played a role including contracts awarded at Immingham Green Energy Terminal at a cost of £170m.

“A great start to the year with contract awards augurs well for 2025,” said Barbour ABI Head of Business and Client Analytics, Ed Griffiths. “This suggests that the downturn highlighted in the recent PMI index could be short-lived, with new work on the horizon.

“A further fall in interest rates announced this week will also add to increased confidence from investors, although the news is tempered by a fall in projected UK GDP. Although growth is expected for 2025 it will be at the lower end in the built environment.”

Meanwhile the latest planning application figures remained flat with a 2% increase between November and December 2024. Although there was little movement overall, individual sectors did see significant rise and falls.

December was a strong month for the infrastructure sector with a 35% increase in the value of applications. The top application was the 840MW Botley West Solar Project. The North East saw a strong recovery from a weak November rising to £540m. The largest application was a 1000MW Battery Storage Project.

“Our recent industry performance review highlighted how infrastructure sustained the sector in 2024. Planning applications at year-end suggest this trend could continue into 2025, with green energy at the forefront,” said Griffiths.

“However, uncertainty remains high, and the industry will be hoping that falling interest rates finally lead to an increase in project submissions.”

--Barbour ABI

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