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Value of new construction contracts down – new figures

Words: Laura Edgar
Construction / Shutterstock_180963377

The value of new construction contracts commissioned in April fell by 16 per cent when compared with March 2017, new figures have suggested.

The latest Economic and Construction Market Review by industry analysts at Barbour ABI notes that £5.4 billion worth of construction contracts were commissioned in April, lower than in any month in 2016.

There were decreases in contract values across every major sector in the industry, except for infrastructure.

As the snap general election draws closer, funding for the NHS has been a major focus area for the political parties. Barbour ABI’s report suggests that medical and healthcare construction only generated £84 million worth of construction, the lowest for almost five years and considerably lower than its last peak in January 2016 of £319 million.

In the three months to April, the value of medical and healthcare contracts decreased by 21 per cent on the previous three months and was 41 per cent down on the same period in 2016.

The residential sector suffered a decrease of 30 per cent in April to £1.7 billion, after six months of generating contracts worth more than £2 billion each month.

The infrastructure sector saw some big contract wins, including the £300 million Thirlmere to West Cumbria water mains contract and the Avonmouth 33-megawatt waste-to-energy plant in Bristol, which has been valued at £252 million.

Michael Dall, lead economist at Barbour ABI, said the timing of Easter this year may have halted activity in April, however, the fall is larger than in other years meaning other factors could be at play.    

“As the residential sector failed to continue its strong performance in recent months, it only highlights the need for other sectors to pick up the slack, as a strong construction industry cannot rely on one sector to perform each month. Although a comparatively small sector, it was interesting that the value of contracts in the medical and healthcare sector fell to a five-year low in April. A sector that is largely dependent on capital investment from the government, these figures will ramp up the pressure on all political parties to respond to calls for additional capital spending in the NHS.”

The report can be found here (pdf).

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