Construction contract awards hit their lowest point this year, falling 11% from April to just £5.1bn – now £1.5 billion below the 2024 average.

New data from Barbour ABI shows the commercial and retail sector took the sharpest hit in May, dropping 68% to just £290m – the lowest monthly value in more than a year.

Infrastructure also suffered, recording its weakest performance since November, down 26% to less than £1bn. Notably, the largest project, accounting for nearly half of the sector’s total, was Thames Water's announcement of a £400m upgrade over the next seven years to improve Coppermills Water Treatment Works in Walthamstow, London.

Residential awards slipped 10% to £1.7bn. While this is an improvement compared to February and March, it remains below both the 2024 and 2025 averages. The £400m Bollo Lane development in London was the highlight for this sector.

The East of England endured its worst month for contract awards in more than a year, with values dropping 75% from the 2024 average. Only seven projects exceeded £10m, and none topped £30m.

Ed Griffiths, head of business and client analytics at Barbour ABI, said: “The Spending Review was widely seen as good news for construction but the backdrop is that it’s been another disappointing month for contract awards.

“The industry continues to grapple with economic uncertainty and regulatory hurdles that are delaying many schemes. The project pipeline remains relatively strong, but these barriers need to be addressed to unlock progress – although it’s possible that meaningful growth may not materialize until 2026.

“There are potential bright spots ahead in green energy and data centres, which continue to drive demand for transmission infrastructure. Infrastructure hopes may be buoyed by the chancellor’s recent announcement of a £15bn investment, particularly focused in the North of England.”

Planning approvals also fell in May, declining 15% to £8.bn – the lowest month so far this year but still 5% higher than the 2024 average. Meanwhile, residential planning approvals rose to £3.2bn, aligning with the 2024 average.

And the overall value of planning applications dropped 48% from March to £7.bn. This steep drop is partly due to the completion of two large projects in infrastructure and medical and healthcare at the end of March, but all sectors have been subdued.