Construction activity up despite decrease in growth rate

Published:  20 June, 2014

New figures released on 19 June reveal that construction activity continued to rise in May, but economists are concerned that the recent high rate of growth appears to be slowing.

Barbour ABI, which supplies construction data to the Office for National Statistics (ONS), published its latest economic and construction market review showing that the total value of all new construction contracts in May increased by 5.3% compared to April, with an additional 0.6% increase in the total number of projects for the same period.

However, because the total value of construction contracts in May was 3.7% lower than May 2013, economists believe the high levels of growth are beginning to slow.

The report also reveals that residential construction continues to hold around a third of the total value of contracts awarded in the UK. Only 2 of the past 14 months have seen residential construction take less than 30 per cent, fuelling speculation that the industry is becoming too reliant on the housing sector. The majority of the contracts awarded in May by value were in London, which accounted for 24% of the UK total.

Michael Dall, lead economist at Barbour ABI, said: "After the poor weather impacting the growth of contracts awarded at the start of the year, it's positive to see the construction industry bouncing back with a healthy month-on-month increase in activity. It's also encouraging to see the number of projects increasing, which suggests there is a healthy pipeline of work.

"Despite this, there are clear signs that the growth we've become used to over the last six months is starting to slow, such as the second consecutive month where year-on-year values have fallen.

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