Mixed bag for construction in August as housebuilding rises but other sectors fall

More than two months after the Brexit vote, the residential construction sector is on the up with the value of contracts awarded reaching £1.7bn in August, an increase of 13% compared to the same time last year, based on a three month rolling average.

According to the August edition of the Economic & Construction Market Review from industry analysts Barbour ABI, it was the residential and infrastructure sector that kept the industry on a steady pace last month, delivering £3bn of the £5.5bn total construction contracts awarded. Interestingly, residential construction across the first two post-Brexit months (July & August) are significantly higher figures than when compared to the same months in 2015.

Despite the strong results from the residential sector, it was not enough to mark an improvement for overall construction new orders as they fell to £5.5bn in August, a month-on-month drop of £300m, albeit in what is traditionally a slower summer month.

The commercial and retail sector particularly struggled in August, experiencing a decrease of 43% compared to August 2015, which continues a poor run of performance over the long term for the sector.

Commenting on the figures, Michael Dall, lead economist at Barbour ABI, said: “The construction sector is yet to experience the full post-Brexit effects that were forecasted to occur after the result was announced. The mixed results from the residential sector has still been robust enough to keep the industry in a position to potentially grow in the near and long-term future.

“Developers are also keen to keep progressing with major projects, such as the £750m Galloper offshore wind farm and the £150m Greenwich Peninsula residential development commissioned this month alone, which in turn is helping to build confidence and provide a well needed boost across the industry.”