Member Article

Growth in construction activity during Q3

The construction industry enjoyed further growth in Q3 2013, despite a marginal 0.1 per cent decline in output in August, according to the findings of the Construction Review by North West industry intelligence specialist Barbour ABI.

The figures fuel hopes of a sustained recovery both for the sector and the UK economy overall.

The residential sector led the increase in output, accounting for more than half of contracts awarded in Q3. Now valued at almost £6.9 billion, the number of new house-building projects climbed by eight per cent from the previous quarter, driven by the Government’s Help to Buy initiative. This is expected to rise further in coming months.

However, one of the most surprising findings of the Construction Review was the growth in the civils sector, which showed a 174 per cent increase in the value of contracts over Q3. Now worth £3.1 billion, civils projects have soared by 213 per cent compared with the same period in 2012, a surge attributed to the commissioning of a number of large-scale road, rail and bridge projects over the last twelve months.

Despite the generally positive news for the construction industry, the medical and education sectors still face challenges. The value of new projects in these sectors declined by one per cent and 29 per cent respectively in the third quarter, due to the Government’s on-going austerity measures. The reliance on state funding for new contracts means that the situation is unlikely to improve in the near future.

Michael Dall, lead economist at Barbour ABI said: “It is unsurprising that residential construction projects were responsible for the lion’s share of the growth, but what is interesting is the surge in the number of civils projects nationwide. This is traditionally a highly volatile sector, so it remains to be seen whether its recent performance will be replicated in Q4.

“While there is much to celebrate, the construction industry still faces difficulties. A number of sectors, such as medical and education are still in decline, and much of the growth in the highest performing sectors is the result of Government stimulus driving market demand.

“The issue is what happens when this stimulus ends but that’s where the major investment outlined in the National Infrastructure statement comes in – getting these projects started is vital to sustained growth in the future.

“Overall, life is starting to return to the construction industry, and we can expect a much sunnier outlook for 2014, supported by sustained house building levels and improvement in general economic conditions.”

Barbour ABI is based at Cheshire Oaks near Ellesmere Port in Cheshire. The Construction Review is available for download at http://www.barbour-abi.com/zones/Construction_Review_Q3_2013.pdf.

This was posted in Bdaily's Members' News section by Simon Malia .