Construction awards jump 50% in January, says Barbour ABI

Contract awards in January jumped 50% from December as construction industry spenders attempted to kick-start the industry following the winter break, according to the latest analysis from Barbour ABI.

But despite the rise, figures remained 14% down on the same period last year.

Notably, house building contract awards were up by nearly 75% from December, giving a cautiously optimistic start for the residential sector which completed just 133,213 new homes in 2023 according to the NHBC. 

The news was not so good for infrastructure, with awards down 6% compared with January last year and 17% down compared to December.

Last month Barbour ABI reported that spending on construction projects in the UK fell £11.1bn to £69.2bn in 2023, a 14% reduction from a record £80.4bn in 2022 despite inflated material costs. 

Barbour ABI consultant economist Kelly Forrest said: “Given the struggles faced by construction in 2023, a weak start to 2024 would be disappointing. 

“Twenty-six construction firms have already collapsed in 2024, including Stewart-Milne Group, and the latest Red Flag Alert report from Begbies Traynor found that 47,477 firms were on the edge of collapse in the final three months of last year. 

“Industry watchers will therefore look closely to see if the 50% bounce back in spending is the start of an upward trend or a result of starting from a very low baseline.” 

The report showed positive signs in both the health and industrial sectors. 

Health awards hit £0.5bn, 85% higher than in January last year and the highest level recorded since February 2022. 

Significant contract awards included design and construction work at the Royal Shrewsbury, Frimley Park and Florence Nightingale hospitals.

Totalling £0.4bn, education awards were 15% down annually but this was still 50% higher than in December and follows a 20% uplift in education awards during 2023 as a whole thanks to RAAC works and the School Rebuilding Programme.

The year started on a more subdued note for commercial and retail, hotels, leisure and sport sectors, all of which continued to see awards decline after 2023's double-digit losses.