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Barbour ABI releases construction data for September 2014

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World Cement,

Data released by Barbour ABI revealed that the level of construction contracts awarded increased in September to the value of £5.6 billion – the highest since January. The total value of new contracts awarded in September increased by 5.8% from the month before, with values 11.7% higher than September 2013.

Unlike recent months, where residential construction has dominated the proportion of new contracts awarded, there was more of an even split across key sectors in September. Residential accounted for 24%, closely followed by infrastructure (23%), commercial and retail (22%) and education (14%).

“Today’s figures will give a huge boost to the construction industry, particularly those in the education sector, which is celebrating its highest level of new contracts awarded in two years, said Michael Dall, Lead Economist at Barbour ABI. “Over recent months, it has become clear that the industry cannot only rely on the residential sector to instigate long-term growth – other key sectors such as commercial and infrastructure need to improve to make the recovery more resilient.”

“While infrastructure is still performing poorly compared to pre-recession levels, today’s report appears to indicate a widening of construction activity with growth more evenly spread,” Dall continued. “With recent forecasts from the Construction Products Association also predicting 23% growth by the end of 2018, this positive news looks set to continue.”

Scottish construction boom

Scotland accounted for 21% of the total value of new construction contracts awarded in September, particularly in the medical and healthcare and infrastructure sectors. The value of new construction contracts awarded totalled circa £1 billion. Scotland accounted for 59% of the total value of medical and healthcare contracts awarded, as well as 53% of contracts awarded in the infrastructure sector.

“Following our report in July, which showed that more than £769 million had been invested in construction contracts to get Glasgow in shape for its summer of sport, today’s figures represent yet more good news for Scottish construction, Dall commented. “Contributing to this growth is a number of big ticket projects awarded in Scotland last month, including a new bypass to the west of Aberdeen worth £400 million, a £300 million on-shore wind farm based in the Highlands and a new 350 bed hospital at Dumfries and Galloway Royal Infirmary valued at £200 million.”

“Looking ahead, Scotland should continue to benefit from construction activity in these sectors, with nearly £10 billion committed to health and social care investment in the National Infrastructure Plan 2012, as well as £730 million set aside for vital transport infrastructure projects,” Dall said.

Education construction contracts reach highest level in two years

The data also revealed that the value of education construction contracts awarded in September reached its highest level in two years. Education construction contracts totalled more than £811 million during the month, a 62.5% increase on the same month last year and 8.5% higher than August. The sector also accounted for 14% of the total value of all construction contracts UK-wide, with 22% of these awarded in the North West.

“Construction in the education sector is booming at the moment, boosted by a number of Priority School Building projects valued at £10 million individually,” Dall stated. “This plethora of Priority School Building means that state primary and secondary school projects dominate the sector this month, accounting for 60% of the total value of projects awarded in September.”

“Going forward, this level of investment looks set to continue as measures announced by the government in this year’s Budget will inevitably impact on the value of contracts awarded in the sector over the coming years. This includes £106 million over five years to fund around 20 additional centres for doctoral training, and an additional £85 million over the next two years to extend the Apprenticeship Grant for Employers Scheme,” Dall concluded.

Adapted from press release by Rosalie Starling

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