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UK construction begins slow recovery from lowest-ever output levels

The number of construction contracts awarded in the UK in June rose by over 81%, according to industry analyst Barbour ABI.

Contractors signed a total of 477 contracts during the month, amounting to business worth approximately €2.42 billion, based on a three-month rolling average.

While the value of projects represents a decrease on the previous month of 9.2%, and equates to a 57.3% drop from June 2019, Barbour ABI said the growth in contract numbers represents an improvement in conditions, as the UK emerges from its coronavirus lockdown status.

The figures come from Barbour ABI’s Economic & Construction Market Review, which breaks down construction industry activity into seven segments: Residential, Industrial, commercial & Retail, Hotel, Leisure & Sport, Medical & Health, Education and Infrastructure.

The report shows that residential construction took the greatest share of the contract awards, with 39% of all those awarded.

That said, the largest single contract went to the infrastructure sector, with Gatwick Airport’s railway station refurbishment valued at approximately €165 million.

A geographical view of the UK’s construction awards shows London leading with 26.1% of all contracts in June, followed by the South East (16.4%), then the North West (13.6%).

Tom Hall, chief economist at Barbour ABI and AMA Research, said, “The UK economy plateaued in May as the easing of some lockdown restrictions mid-way through the month failed to significantly increase output. In-month GDP growth was 1.8% after the 20% contraction in April. With the outcome underwhelming compared to city economists’ expectations of 5.5% growth, output remains 25% down compared to February. June’s figures published next month will give a better understanding of how quickly lost output can be regained as larger parts of the economy resumed activity.”

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