A REPORT reveals that construction activity rose to pre-Christmas levels last month, after a sharp drop in February due to the bad weather.

With the value of contracts awarded worth £5.2 billion in March - an increase of 7.2 per cent on the month before - experts are hopeful it will put the industry back on an upward trajectory, with the value of new contracts rising by almost 25 per cent year on year.

The figures are taken from Barbour ABI’s latest Economic & Construction Market Review, which also shows that residential construction is still the most dominant type of contract awarded in the UK, accounting for more than a third of the total contracts by value.

Only two of the past 12 months have seen residential construction take a slice less than 30 per cent, a sign that house building continues to drive the industry’s long-term recovery.

The report also highlights London’s hold on the market, which resulted in a disproportionate share of contracts awarded, with the capital accounting for more than a quarter of the total value but only 14 per cent of the projects by quantity.

Five of the top 10 most valuable contracts were located in the city, such as the new £150 million Crossrail maintenance contract, two large office schemes including the 2.3 acre development at Rathbone Place and two large residential schemes, including the 737 housing units at Nine Elms Point worth £73.7 million.

Michael Dall, lead economist at Barbour ABI, said: “All the indicators pointed towards a poor month for construction in February, with the severe weather possibly forcing contractors to put work on hold and new projects unable to commence.

“Therefore it’s positive to see that activity has picked up again in March, with a healthy 7.2 per cent rise on the month before. This is backed up by the latest ONS construction output data, which showed construction output in the first two months of the year at four per cent higher than a year ago and growth forecasts for 2014 revised up to 4.5 per cent.

“It’s clear that the continued strong performance of private housing and upturn in wider infrastructure has aided the upturn in this month’s figures but necessary repair works and flood defence projects will have played a significant part too.

“Looking ahead, business indicators and official survey data all point to plenty of momentum in the economy and growing confidence, which is great news for the construction industry.”

The Economic & Construction Market Review is a monthly report designed to give current insight into UK construction industry performance. It is compiled from Barbour ABI’s records of construction data for every UK planning application and key indicators such as the Office for National Statistics’ Construction New Orders data.

Report highlights:

The total value of new UK construction contracts awarded in March was £5.2 billion based on a three-month rolling average - 7.2 per up on February and a 25 per cent increase on the value recorded in March, 2013

The number of construction projects within the UK in March was up nearly 22 per cent from March, 2013

Residential had the highest proportion of contracts awarded by value in March, with 35 per cent of the UK total

The majority of contracts awarded in March by value were in London, which accounted for 26 per cent of the UK total