Data from the CPA/Barbour ABI index shows that construction contracts went up 11% in September

Noble Francis

The CPA/Barbour ABI index shows that the number of new construction contracts rose in September, after a slight dip in July and August. hit 118 in September for total construction, 11% higher than August, and also 7% higher than a year ago.

Earlier in the year, housing was the sector driving recovery and it continued to grow in September. Private housing contracts rose 2% last month compared with August and were 26% higher than a year ago. However, September鈥檚 data highlights that the optimism is spreading into other private sectors: contract awards for new offices, factories and warehouses all rose significantly.

Conversely, public sectors continued to be very subdued, especially within the health sector, outside Procure21+ work. Education work has picked up thanks to university projects, priority schools and academies. However, levels are still considerably lower than three years ago.


Warehouse sector index: Waking the shed

Although the focus in construction tends to be on housing or commercial, the worst affected sector has been warehouses.

Output in 2012 was 60% lower than at peak, in the mid-2000s, and it continued to fall during 2013 due to excess floor space all around the country and the decline in consumer spending.

However, the CPA/Barbour ABI Warehouses index suggests that the sector may, finally, be ready for a revival, albeit from a very low base. Averaging 150 over the past four months, the sector has been boosted by the 拢400m Doncaster inland port, which includes considerable warehouse facilities. This should feed through into output over the next 9-12 months.

Looking further forward, the index suggests that further medium-sized projects are in the pipeline and, although it is too early to call a sector recovery for certain, recovery in consumer spending and the wider economy should lead to a rise in new warehouse construction. Our forecasts anticipate the sector growing 3% next year before averaging 5% growth each year afterwards.

Noble Francis is economics director at the Construction Products Association

 

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