A lack of investment in major projects has stunted growth in the UK construction sector, with the value of new contracts in January down 10.6% year-on-year to £5.4bn.
The latest Economic and Construction Market Review from analysts Barbour ABI found that residential housing developments and infrastructure both dominated the construction sector in January, contributing more than 65% of the total value.
The largest project in January was the £800m Spire London Hertsmere House development at West India Quay in London – more than four times larger than the next biggest development.
Eight of the biggest 10 projects came from the residential housing or infrastructure sector. These included the £200m Wednesbury to Brierley Hill Metro Extension and the £100m Waste Water Treatment Works in Blackburn.
The report found that London led the way when it came to a major project investment, with contracts awarded in the capital accounting for 32% of the UK total. It said the West India Quay development played a big role in the total.
Manchester came second, holding 13% of contracts and Scotland was third with 11%.
However, the report said it was concerning that the education and hotel, leisure and sport sectors both saw monthly decreases in January when the industry usually expects a rise in after a traditionally quiet December.
The residential housing, infrastructure, commercial and retail, industrial and medical and health sectors all saw increases on the previous month but below the levels of January 2017.
Separately, Barbour ABI said data showed Carillion was the main contractor in almost 60 schemes worth a total value of £5.7bn, not taking into account any other projects they were involved in.
Michael Dall, lead economist at Barbour ABI, said the sector was feeling the effects of the Carillion collapse.
“The recent collapse of Carillion has not done much for confidence in the sector, which is already facing a number of headwinds. Mainly due to a lack of major projects, construction has been held back in January,” he said.
“Nevertheless, encouraging figures from the residential house and infrastructure sector is pleasing but other sectors now need to help pick up the slack, such as hotel, leisure and sport, which produced its lowest figures in January since October 2015.”
Top 10 construction projects in January 2018
- Spire London – Hertsmere House, West India Quay (£800m) - London
- 80 Fenchurch Street – offices and retail (£200m) - London
- Wednesbury to Brierley Hill extension (£200m) - West Midlands
- Paris Gardens & Hatfields – offices and retail (£150m) - London
- Blackburn Waste Water Treatment Works (£100m) - North West
- Sellafield – Sprs Retreatment Facility (£95m) - North West
- Equipment Works, Black Forest Road (£95m) - London
- Norma Plot L – Angel Gardens – 458 flats/offices (£90m) - North West
- Afton Wind Farm – 50MW (£76m) - Scotland
- James Wolfe Road – student accommodation (£75m) - South East