Data from the CPA/Barbour ABI index shows that contract awards in August were similar to a year ago
Contract awards in August remained similar to a year ago and at 106, the index was only 1% lower than a year
ago. However, this was still 8% higher than the long-term trend value and suggests that, following the initial surge as the industry caught up after bad weather in March, especially in private housing, the industry has settled down, with orders feeding through consistently. This should provide growth in activity on the ground in the near term.
However, while the overall picture is of recovery, it really depends on which sector you are working in. It is still primarily housing driving growth, especially within London and the South-east, but education contracts have also increased. In the year to August the CPA/Barbour ABI education index was 8% higher than a year ago so we may finally be seeing growth in schools work from academies and free schools to add to university projects that are coming through.
Public health sector index: flatlining until 2014
Given that the last decade saw a cycle of building new, large hospitals to address the underinvestment in the nineties, it was unsurprising to see that once this was completed in 2008, workloads fell away sharply, especially with austerity refocusing the industry away from new build work and towards maintenance.
Procure 21+, which is worth £4bn over five years, continues on from Procure 21 and is leading to a stream of small health projects. However, there is relatively little other activity in the health sector, especially with delays on private investment while industry was awaiting the replacement for PFI.
This is reflected in the CPA /Barbour ABI health index, which in August was 7% higher than July but still 40% lower than the long-term average. There are five sizeable projects in the sector including the Alder Hey, Royal Liverpool, Broadmoor, Teesside and Midland Metropolitan hospitals but until we see these projects feed through into contract awards, and then a 12-month lag for activity to reach the ground, there is unlikely to be a big recovery in the sector, until the second half of 2014 onwards.
Noble Francis is economics director at the Construction Products Association