Construction workload decline slows

Construction workloads continue to fall, but at the slowest rate for over a year and a half, according to the latest market survey by the Royal Institution of Chartered Surveyors.

The report on Q3 of 2009 said that workloads in non-housing public sector construction reached their most positive level since the first quarter of 2008, thanks to acceleration in planned public sector capital spending.

Elsewhere, workloads continued to decline though 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.

Private housing saw a reduction in the number of surveyors reporting falling workloads. In the last quarter of 2008, 66% more surveyors were reporting a fall in workloads; this figure is now just 5%.

Surveyors are reasonably positive about the outlook for the next 12 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 further, the net balance of respondents expecting a reduced headcount narrowed is just 3% compared to 46% in the first three months of the year.
 
At a regional level, workloads increased further in Wales with 17% of surveyors responding positively compared with 1% in the second quarter. In London and the South East, workloads appear to have stabilised after five successive quarterly declines.

However, other parts of the country are continuing to see construction activity drop according to the results of the survey.

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.”