Industry observers remain confident about the state of the construction sector in 2016, despite a slight dip in January contract values.

According to the latest Economic & Construction Market Review, contract values fell by 9% on the month to £5.3 billion.

But insiders have said they expect workloads to become stronger over the months ahead.

Michael Dall, lead economist at Barbour ABI, which put together the report, said a raft of construction schemes are set to get off the ground shortly.

He said: “Whilst January was a relatively slow start for construction in terms of contract value, the industry pipeline is relatively strong and I’m expecting to see a flurry of £100 million plus projects to get agreed over the coming months.

“I see private housing and infrastructure as the bright lights of the sector for 2016.”

The report found the residential sector pulled in the highest contract value in January, at £1.4bn.

This was despite the fact that average contract values in the sector fell by 36% on the previous month.

Elsewhere, the construction of new offices gave the commercial and retail sector a boost.

New office projects contributed some £800 million to the sector, or around 20% of its overall contract value.

Experts said this total was greatly helped by the £500m 22 Bishopsgate office scheme that was recently commissioned.

Wales was one of the strongest performers regionally, after the £450m Wylfa power station in Anglesey helped to bolster its infrastructure sector.

Concerns were raised in the report, however, relating to the shortage of skilled workers in the industry.

Mr Dall said this was one of the factors that could drive up the cost of forthcoming projects.

He said: “The industry does need to be wary of a growing trend of major contractors not being able to agree a final price with clients, largely due to cost inflation and skills shortages.

“It is an indication of the difficulties the industry could face in the future as demand seems to be holding strong but increasing costs could potentially affect the sector’s ability to deliver.”