All construction sectors show signs of improvement in July

Connaught Square Digbeth, Birmingham

The total value of construction contract awards in July 2020 was £6.3 billion which compares to £3.1 billion in June and £1.6 billion in May, according to the latest research by industry analysts Barbour ABI.

These figures underline the magnitude of the growth trend for contract awards over the last two months. The number of awards has also increased in July to 860 which is an increase of 80.3% on June. The residential and infrastructure sectors accounted for over 50% share of total contract awards.

The latest edition of the Economic & Construction Market Review from Barbour ABI, highlights levels of construction contract values awarded across Great Britain.

Every sector had at least 33% growth in July, compared to June, with up to 98% growth in certain sectors. The residential sector contract awards increased by 65.9% on June, Infrastructure climbed 75.4% and education contract awards increased by 43.5%.

London was the leading region in July accounting for 18.5% of awards. The second largest region was Scotland with attributable share of 17.1% and was followed by the South East with a 12.8% share of awards.

Birmingham was the location for the largest residential award in July which was the £150 million Connaught Square development in the Digbeth area of the City. The successful contractor was Colmore Tang Construction.

The UK construction sector in August 2020 is firmly on the path to recovery with output for May and June showing some bounce back. In addition, contract awards data for June and July is extremely positive indicating that the 51.1% slump in new orders in Q2 might be allayed to some extent in Q3. In addition, the Business Impact of Coronavirus Survey undertaken by ONS indicates that the construction sector had 75.5% of staff working at their normal place of work or working remotely between the 15th and 28th June 2020. However, negatives still remain with supply issues of key products such as plaster and some timber products, especially treated timber, fence panels, decking and most recently carcassing timber remaining problematic.

Tom Hall, Chief Economist at Barbour ABI and AMA Research said, “While the economy entered a recession, the construction industry has seen significant increases in activity over the last two months. This could potentially be due to the restarting of activity that had stalled in previous months. A strong planning pipeline could suggest the industry will continue to strengthen but at what rate remains to be seen.”