It is not often that construction gets on the front page of the Financial Times. Considering construction is around 10% of the whole economy it is quite scandalous how little coverage. Still, it is there on the front page so we should be glad. It also gets a good half page in the FT on page 19 as well.

Headlines of ‘Builders See Value of Orders Collapse’ and ‘Second Slump Looms for Construction’ get you on the front page I guess! Behind it is the Barbour ABI data covering contracts awarded for the top 50 contractors.

According to Barbour ABI, value of orders for those top 50 contractors in the 12 months to May were 39% lower than a year earlier.

The work from Barbour ABI covers how one particular, high profile, part of the industry is likely to fare given the contracts awarded are forward looking indicators and suggests that the major contractors are likely to suffer a considerable fall in work over the next 12-18 months.

I certainly wouldn’t expect construction workloads for the industry to fall that much and I don’t think we’ll see that extent of drop off in the construction new orders data from ONS that comes out on Friday 3 June.

Project pipeline data tends to be much more volatile than workloads, especially when the pipeline data is on contracts awarded. Also, it will be interesting to see how Barbour ABI has treated framework contracts.

It would be no surprise if a great many public sector framework contracts were signed up to in 2009/10 due to public sector stimulus and I can’t see too many of those having been signed in the last few months.

Furthermore, since the new government came to power, a hiatus in spending by the coalition also won’t have helped things. The Barbour ABI will capture all this, and the effects of the poor weather in November and December.

Yet, as I say, I wouldn’t be expecting the type of falls in output that the Barbour ABI data suggests for the industry as a whole although it will, undoubtedly as the data suggest, endure falls given that public sector spending will fall 30% in the next few years and it is one third of construction.

At the same time, private sector will be growing and that is the other two thirds…

  • For total orders for the Top 50 constractors over the last 12 months click here .

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