NI construction sector the UK’s least optimistic
Further falls in the volume of publicly-funded building work being done in Northern Ireland dragged local construction activity into marginal decline at the end of last year, according to the latest RICS and Tughans Construction and Infrastructure Market Survey.
Whilst the amount of private sector housing-building and commercial construction work rose in Q3 2018, according to respondents, falls in activity were reported in areas including public housing, public non-housing and infrastructure.
As a result, Northern Ireland was the only region of the UK where the balance of surveyors reported an overall decline in activity, albeit marginally so. Northern Ireland was also the only region where surveyors reported a fall in the number of business enquiries received.
The outlook is also less positive here than in other UK regions when it comes to workloads, employment prospects, and profit margins. A smaller percentage of surveyors here than elsewhere expect each of these to rise in the 12-months ahead.
Jim Sammon, RICS Northern Ireland Construction spokesman, said: “While it is encouraging that surveyors continue to indicate rising activity in some areas of the market, such as private house-building, the picture across other areas, particularly infrastructure, continues to cause concern.”
“With falls in infrastructure, public housing and public non-housing workloads, it is clear that the lack of decision-making in government continues to impact on construction activity and on the delivery of important projects. Alongside uncertainty relating to Brexit, surveyors cite this as a major challenge for the market and they anticipate that 2019 to be a challenging year,” he adds.
Tim Kinney, Construction Partner, Tughans, said: “The two-speed nature of Northern Ireland’s construction sector appears to continue, with some private sector activity forging ahead, while surveyors report declines in infrastructure and other publicly-funded workloads”.
“Housing-building appears to be particularly strong, alongside private commercial activity. However, it is essential that decisions can be made in relation to major publicly funded projects to ensure that they can proceed and deliver a positive impact for the economy and society,” he adds.
The key headline Northern Ireland findings of the latest survey are as follows:
- The headline workloads net balance was -3% in Q4 (meaning that 3% more respondents reported falls in workloads in Q4 2018 than reported rises).
- Infrastructure activity saw a decline according to a net balance of -25% of respondents, while a net balance of -14% of respondents said that public non-housing workloads had fallen.
- Public housing workloads also fell, according to a net balance of -21% of Northern Ireland surveyors
- A net balance of 14% of respondents reported rises in private housing workloads
- Meanwhile private commercial activity increased according to a net balance of 9% of respondents
- Private industrial activity was reported to have fallen (a net balance of -29%).
- Looking ahead, Northern Ireland surveyors are the least optimistic in the UK about the next 12 months when it comes to employment with a balance of +4% saying they expected to take on new staff, compared with a UK average net balance of +15%
- Expectations around workloads also the lowest in the UK, showing a balance of 0% compared with an average of +24% for UK.
- Respondents expect to see profits decrease in the next 12 months, with a net balance of -21% recorded.
- Despite the lack of optimism in taking on new staff, surveyors in Northern Ireland are still reporting shortages in quantity surveyors (+55%), other construction professionals (+47%) and labourers (+51%).