Value of infrastructure construction contracts plunged 20% in July, says Barbour ABI

Infrastructure construction suffered a sharp deceleration in July, with the value of contracts dropping 20% to £1.5bn compared to June, according to the latest market review from industry analysts Barbour ABI.

With the first full month of post-Brexit figures in the books, the company said it was the infrastructure sector that experienced a decline, based on a three month rolling average.

According to the August edition of Barbour’s Economic & Construction Market Review, construction new orders were down to £5.8 billion in July, a month-on-month drop of £400 million.

Along with infrastructure, the other prominent sector in construction was residential, which saw a decrease of 7% in contract value and a drop of 2,000 units compared to the previous month.

However it wasn’t all doom and gloom for the industry, as the value of contracts for commercial office construction in July increased by 22% compared with June, worth a total of £648 million on the month. £250 million of that total came from the West Midlands development Paradise Circus, an eight-storey office block.

The Industrial sector also performed well in July with its value the highest it’s been so far in 2016, reaching £564 million, greatly helped by the commissioning of Reckitt Benckiser £100 million new global centre for scientific excellence in Kingston-upon-Hull.

Michael Dall, lead economist at Barbour ABI, said: “In the first full month since the vote to leave the European Union, the value of construction projects reaching contract award stage declined in July. This is unsurprising given the uncertainty in the economy.

"However, it is the infrastructure sector which has performed particularly poorly this month and with the change in narrative from the current Government, it puts more emphasis on any fiscal stimulus that they may be planning to make.”

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