All construction workloads fell in the third quarter according to the latest RICS survey of the sector with the exception of the non-housing public works category which is providing an important crutch for the industry (November 6, 2009).
Workloads in non-housing public sector construction reached their most positive level since the first quarter of 2008 as the acceleration in planned public sector capital spending continued to filter through into new projects in education and health among other areas. Elsewhere, workloads continued to decline albeit at a lesser pace than in the second quarter of the year. The private commercial and industrial sectors remain the weakest part of the construction industry with larger negative readings than either public housing or infrastructure.
Significantly, private housing saw a material reduction in the number of surveyors reporting falling workloads. As recently as the final quarter of last year, 66% more surveyors were reporting a fall in workloads. This figure lessened to 49% in the first three months of the year and 28% in the second quarter but is now at just 5%.
Interestingly, surveyors are a little more positive about the outlook for over the next twelve months with 9% more respondents expecting output to rise than fall the first positive reading since the first quarter of 2008. Although employment is thought likely to fall a little further, the net balance of respondent expecting to see a reduced headcount narrowed to just 3% compared with 24% in the second quarter and 46% in the first three months of the year.
Despite this, the proportion of surveyors reporting skill shortages for trades person fell to just 2%, the lowest reading since the question was first asked in 1998.
At a regional level, workloads increased further in Wales with a net balance of 17% of surveyors responding positively compared with 1% in the second quarter. Meanwhile, the picture in London and the South East appears to have stabilized after five successive quarterly declines. Other parts of the country are, however, continuing to see construction activity drop according to the results of the survey. Looking forward, confidence regarding the outlook for workloads over the next twelve months is most positive in Wales followed by the Midlands, East Anglia and London and the South East. Surveyors are most pessimistic in Scotland and Northern Ireland.
Commenting Simon Rubinsohn, RICS Chief Economist said: "With development finance currently still in short supply it is hardly surprising that workloads in the construction industry remain under pressure. The good news is that the picture does not appear to be getting very much worse and there is even a little bit more optimism about the prospects. However the continuing squeeze on profit margins in the sector is a concern alongside the likely scaling back in government projects over the coming years.
"Sadly there is little evidence as yet that residential home starts are picking up which is a particular worry given that a shortage of stock is contributing to the recent rebound in house prices."