Carillion collapse worsens an already subdued construction sector
The collapse of Carillion has proved to be a body blow to confidence in the UK construction sector, latest figures have suggested.
After a volatile 2017 for construction, the new year got off to a devastating start when the group went into liquidation.
The latest edition of the Economic & Construction Market Review from industry analysts Barbour ABI shows the value of new contracts awarded during January was £5.4bn – 10.6% lower than the same time last year, as fewer large projects came through.
Residential housing and infrastructure both dominated the construction sector across January, with contract values at £1.9bn and £1.7bn respectively, which combined, is more than 65% of the total value of construction in the month.
The largest project awarded in January was the £800m Spire London Hertsmere House development at West India Quay in London, more than four times larger than the next biggest development, the £200m extension of the Midland Metro between Wednesbury and Merry Hill.
Other infrastructure schemes included the £100m Waste Water Treatment Works in Blackburn.
Across the industry, the education and hotel, leisure & sport sectors all saw monthly decreases in value during January, which was all the more concerning as December is traditionally such a quiet month.
The remaining sectors of residential housing, infrastructure, commercial & retail, industrial and medical & health all saw increases on the previous month but overall, were below the levels of January 2017.
Regionally, it was London that led all regions with contract award value standing at 32% of the UK total, largely due to the Hertsmere House development. London was followed by the North West (13%) and Scotland (11%).
Commenting on the figures, Michael Dall, Lead Economist at Barbour ABI, said: “The recent collapse of Carillion has not done much for confidence in the sector, which is already facing a number of headwinds. Mainly due to a lack of major projects, construction has been held back in January.
“Nevertheless, encouraging figures from the residential housing and infrastructure sector is pleasing, but other sectors now need to help pick up the slack, such as hotel, leisure & sport which produced its lowest figures in January since October 2015.”
