Construction activity shifts across the UK

According to a report by industry analysts Barbour ABI and the Construction Products Association, construction hotspots and coldspots have been identified by regional activity and a forward looking indication of growth by region and sector. These hot spots and cold spots seek to identify regions where contract awards in 2016 were significantly above or below previous years, which highlights pockets of activity of contraction in construction over the near term horizon.

The report states that there are clear hotspots for upcoming construction activity over the next 6-12 months in Great Britain. There is only one broad hotspot in this year’s report – Birmingham – where contract awards in each of the three main construction sectors of residential, commercial and infrastructure restricted to a single construction sector, but spread across the regions of Great Britain.

Analysis has been expanded in the 2017 edition of Regional Construction Hotspots to cover coldspots. Coldspots are clustered in the residential sector, with this weakness replicated across the country as contract awards values fell from the highs registered in 2015 and below long-term averages . In the South East and Yorkshire & Humber and the East Midlands, one-third of sub-regions were residential coldspots. London was the sole region where there were no residential coldspots, with contract awards for large developments keeping values relatively unchanged from 2014 and 2015.

In past years, London dominated the ‘hotspot’ pockets of construction activity, however the report for 2016 indicates a spread across Great Britain, with London only holding six of the 61 hotspots. Scotland was the leading region with nine hotspots after doubling its contracts awarded value for infrastructure to £3.8 billion.

The South East region accounts for 15.0% of total UK GVA (Construction gross value added) Key sectors of economic activity in the region are distribution and transport, information and communications, real estate activities, business services and public administration. Construction accounted for 6.3% of regional GVA in 2015 and declined 1.5% in that year. The value of contract awarded in the region totalled £8.6 billion in 2016, a decrease of 15.8% from the previous year. In terms of overall contract awards, hotspots were in East Kent, Mid Kent, Milton Keynes and North Hampshire.

Commenting on the figures, Michael Dall, Lead Economist at Barbour ABI, said: “The Government is focused on raising the levels of major infrastructure projects, in particular public sector schemes such as offshore wind farms, energy plants and motorway upgrades have considerably boosted construction value in more rural regions”.

A copy of the report can be seen here