An uptick in private sector construction workloads was counterbalanced by a fall in public sector work during the third quarter of the year according to the latest Royal Institution of Chartered Surveyors (RICS) Construction Monitor for Northern Ireland. Public housing workloads saw the sharpest fall according to the report, indeed dropping at the biggest rate since 2012.
Overall, a net balance of -2% of respondents in NI reported a fall in construction workloads in the quarter, down from 2% reported in Q2. Whilst NI still sits just below the UK average, which was reported to have fallen flat, the NI workload balance is now more in line with the UK average than it was last year.
Looking at the subsectors though, reveals the contrast between the public and private sub-sectors. NI surveyors reported that workloads in all public sub-sectors fell. In public housing, a net balance of -42% of respondents reported a fall, -36% in infrastructure and -11% in other public works. A net balance of 18% of surveyors reported a rise in private industrial workloads, and 11% in private housing, whilst private commercial workloads were flat.
Looking ahead, Northern Ireland respondents’ expectations are for workloads to be broadly flat over next 12 months. Surveyors in NI are less optimistic than respondents in the rest of the UK where a net balance of 24% expects a rise in workloads over the next year on average.
NI respondents also indicate that profit margins will continue to be squeezed over the next year; a net balance of -20% of NI respondents expect profit margins to fall.
Surveyors in NI continue to note a shortage in labour as well, though less pronounced than before. 52% of respondents reported a shortage in quantity surveyors, down from 55% in Q3 and 31% noted a shortage in other construction professionals, down slightly from 32% the quarter previous. The biggest quarter-on-quarter change is seen in the number of respondents reporting a shortage in bricklayers, with a net balance of 40% of surveyors reporting a shortage, down from 52% in Q3.
Jim Sammon, RICS NI Construction Spokesman, said: “The NI construction sector continues to face a series of challenges including pressures around costs, labour availability and the availability of public finance for projects. Indeed, anecdotally, respondents point to public spending pressures as the major factor impacting on workloads. In this respect, the increase of some £270million in the NI Executive’s Capital Budget resulting from the recent UK Budget is welcome and it is imperative that the NI Executive uses this additional funding to best effect. With public sector work playing such a vital role for our industry and wider economy, we need our government to make the built environment a priority, by investing in infrastructure projects to serve local communities, and working with stakeholders to adequately resource statutory authorities involved in the construction process, including in projects involving water, electricity and planning, so that conditions are created to attract greater private sector investment.”
Commenting on the UK picture, RICS Senior Economist, Tarrant Parsons, commented: “These results show some encouraging signs of improvement for the UK construction industry as we move into the final quarter of the year. While growth prospects for the next twelve months appear to be brightening, challenges persist, particularly around tight profit margins across the industry and ongoing skills shortages. Industry professionals anticipate an improvement in credit conditions over the year ahead, which should provide a much-needed boost to industry confidence”.