A slight dip, but signs remain encouraging

The CPA/Barbour ABI overall building (excluding infrastructure) contract awards index dipped in February, falling 5% to 123 from January’s high. Relative to February 2011, however, the index remained strong (up by 22% over the year) and the strength of commercial contracting activity, compared with the three months to February 2011, was key. This is encouraging considering that indices for publicly-financed housing and education work were very depressed.

From a low base, the commercial offices index rose by nearly 50% year-on-year in February (although 16% lower than in January). There are signs that the brakes on speculative development are being tentatively eased in central London and refurbishment activity has increased significantly. Activity by food retailers continued to buoy the retail sector as large supermarkets ramped up new building work, in addition to extending and refurbishing existing stores.

Kelly Forrest is a senior economist at the Construction Products Association