Construction suffers slow start to 2016 as contract values fall

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The construction sector struggled in January as contract values decreased by 9% from the previous month, according to research by Barbour ABI.

Comparative contract value is also 33% down on November 2015, according to the Economic & Construction Market Review for January. The total contract value for January came in at £5.3 billion.

Retail was the most prosperous area of construction. The sub-sector brought in £1.4bn, despite seeing the contract value fall by 36% from December. A strong demand for office space saw commercial & residential contracts bring in £800m. More than half of this (£500m) came from the recently-commissioned 22 Bishopsgate office complex in London.

Welsh construction also received a boost in January as the £450m Anglesey power station Wylfa was agreed, with Hitachi taking the lead on the infrastructure project.

Barbour ABI lead economist, Michael Dall was still optimistic about the future despite a “relatively slow start for construction in terms of contract value”.

“The industry pipeline is relatively strong and I’m expecting to see a flurry of £100 million plus projects to get agreed over the coming months,” he predicted.

“However the industry does need to be wary of a growing trend of major contractors not being able to agree a final price with clients, largely due to cost inflation and skills shortages.”