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A colossal spike in commercial construction in June could be a sign of increasing confidence in UK business following the General Election, according to a leading construction economist.
June 2015 saw the value of commercial and retail contracts awarded double versus May 2015. This increase - with the value of projects handed out topping £1.2 billion in one month alone - is also a 41 per cent rise compared to June 2014 (based on a three month rolling average).
Exploring the reasons behind the surge, Michael Dall, lead economist at Barbour ABI, the chosen provider of the Government's Construction and Infrastructure Pipeline, said: "The award of Wood Wharf – a commercially-led 'super project' in Canary Wharf - was a significant contributor to last month's spike. However, this major project is indicative of a broader shift in confidence and investment in property by UK businesses.
"Wood Wharf is one of the biggest commercial projects the construction sector has seen for some time, and developers just don't make that level of investment without a clear recognition of demand.
"While the latest GDP figures showed a large increase in investment in transport equipment, a project of this size suggests businesses are also investing in their property portfolios, looking for space to continue their expansion. The stability of having a newly elected Government may also be at play, again, giving businesses confidence in the longer term."
Looking beyond commercial construction, the figures, which are taken from Barbour ABI's Economic & Construction Market Review, also pointed to a continued North/South divide across the UK. Michael added: "Over a third of all construction contracts awarded in June by value were in London, once again indicating a bias towards the South East and demonstrating the challenge of creating Osborne's 'Northern Powerhouse'.
Overall, the value of construction contracts increased by 10.6 per cent in June 2015 versus May. Year on year, this figure is an 18.7 per cent rise against June 2014. The number of construction projects within the UK in June increased by 17.1 per cent on May, but were 10.4 per cent lower than June 2014.
