New construction contract awards increased by 11.6% in January 2018 following downturn

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The latest figures from the ONS indicate the

construction sector in the UK declined by 0.7%

between Quarter 3 and Quarter 4 2017. This

followed a decline of 0.7% between Quarter 2 and

Quarter 3. Two consecutive quarters of decline

is defi ned as a technical recession, so this is the

interpretation from these fi gures. However, it should

be noted that in December 2017 the industry grew

by 1.6% (see fi g. 2.1).

The main reason for the quarterly decrease

in output are falls in all types of repair and

maintenance as well as private commercial work.

Non housing repair and maintenance declined by

2.4% in the quarter while the corresponding private

housing fi gure showed a decline of 1.7%. New work

in the private commercial sector declined by 4.4%

between Q3 and Q4. Over the same period output

in the industrial sector fell by 3.1%. The one sector

which continues to grow is new private residential.

This sector increased by 5% in Q4 compared to

Q3 2017. The challenge will be whether continued

growth in housing can off set the declines in the

other large sectors such as commercial.

CPA/Barbour ABI Index

The CPA/Barbour ABI Index which measures the level

of contracts awarded using January 2010 as its base

month recorded a reading of 127 for January (see

fi g. 2.2). This is a slight increase from the previous

month and demonstrates that while contract activity

remains higher than the base month, it is lower than

this time last year. The readings for Private Housing

were up over the month, and Commercial Off ices

continued to recover although it is still below 100,

which signifi es declines in activity. Commercial Retail

recorded a marginal decrease in January and the

reading for Industrial Factories was significantly lower.

Construction Sector

The Barbour ABI data on all contract activity

indicated that the value of new contracts awarded

in January 2018 was £5.4bn based on a three month

rolling average (see fi g. 2.4). This is 11.6% higher

than December 2017 but 10.6% lower than January

  1. The number of construction projects also

returned to growth in January with 46.6% increase

on December 2017, but this was 19.3% lower than

January 2017.

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