The latest CPA/Barbour ABI Construction Index reached 132 in September, 3% higher than in August and 12% higher than one year earlier
Within this, it is no surprise that private housing was a key driver of the growth but there was also growth in private commercial and a welcome return to growth this year in education work. Underlying the growth in private housing and commercial has been the performance of the UK economy, which continues to go from strength to strength. GDP growth in Q2 was 0.9% higher than in Q1 and GDP in 2014 is expected to be 3% higher than in 2013. Going forward, there are still concerns regarding UK economic growth due to the impact of interest rate rises in early 2015 and a potential hiatus in government spending due to the election in May next year. However, the CPA/Barbour ABI Construction index suggests that clients and contractors alike think that these concerns will be overcome and that workloads will increase nevertheless.
Commercial offices index
Progress outside the capital
The CPA/Barbour ABI Construction Offices Index for September hit 138, 13% higher than in August and 39% higher than one year earlier, clearly indicating that office construction will rise over the next 12-18 months. As the UK economy recovers, services has been the key driver of this growth and, as a consequence, this has had a positive spillover for the office market. Central London has, unsurprisingly, driven the growth in activity during 2014. Leasing activity in the West End, City and Docklands has all risen considerably, active demand is at its highest levels since 2006 and availability is at its lowest levels in eight years. However, it is not just in London where the office markets are beginning to flourish. The largest rises in demand recently have been in Manchester, where take-up in the last quarter was almost double its average for the past five years, and Sheffield, where take-up is at its highest level in four years. As a consequence, the rise in the index suggests that growth in office construction in 2015 may be driven more by new office space outside the capital, which would make a nice change for the sector.
Noble Francis is economics director at the Construction Products Association