Contracts awarded within the construction industry held strong during May, with £6.1 billion worth of contracts awarded and no change from a month ago, along with an 8 per cent increase when compared to the same time last year, confounding fears that the EU referendum would have a serious impact on activity levels.
According to the May edition of the Economic & Construction Market Review from industry analysts Barbour ABI, the top region for construction contract value in May, usually occupied by London, was surprisingly Scotland for the second month in a row. This was greatly helped by the commissioning of the Beatrice offshore wind farm in the Moray Firth, valued at £1.3 billion.
Two sectors that performed positively in May were infrastructure – leading all sectors in May with £2.1 billion worth of construction contracts and 39 per cent of the industry total – and commercial & retail, which increased its monthly market value by 24 per cent to £877 million.
The residential sector, which has played a major role in keeping the construction industry stable over the post-recession years, decreased in contract value in May by 17 per cent compared to April and unusually when compared to the drop in value actually saw the number of units increase by 14 per cent, which could point towards more affordable homes being awarded within the month.
Commenting on the figures, Michael Dall, lead economist at Barbour ABI, said: “With May figures hovering around the £6 billion mark, similar to the previous two months, this indicates a stable construction market that is looking towards the long term, with little sign of worry from today’s EU referendum vote. However if Brexit does take place this is likely to cause a significant change in outlook at least in the short term with the likelihood of a reduction in activity.”
“What is telling is the increase of contract values in May from the infrastructure and commercial & retail sectors, both traditional construction benchmarks that when performing well, give a solid indication that the industry as a whole is moving positively.”