Constuction workloads continue to suffer

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Construction workloads continued to fall sharply in the final three months of 2008 according to the RICS UK Construction Market Survey published today.

Total construction workloads declined for the third consecutive quarter with the net balance falling to the lowest level in the survey’s history (Q2 1994) with 47% more chartered surveyors reporting a fall than a rise. Private housing workloads remained the weakest category with 66% more surveyors reporting a fall than a rise over the period.

The picture for public sector housing was a little better but the latest reading of -20 in the net balance remains consistent with reductions in the levels of new starts. In the South West performance was broadly in line with that experienced elsewhere. 

Private commercial and industrial workloads dropped sharply over the fourth quarter with infrastructure remaining a little more resilient.  However, workloads in this area still declined at the fastest pace in the survey’s history (1998). Whilst the South West also saw falls, they were less marked in the private commercial and industrial sectors than in most other parts of the country.

Confidence in prospects for the next twelve months is also at its gloomiest with a record 45% of chartered surveyors expecting workloads to fall rather than rise. Meanwhile, a net balance of 61% expect a further erosion in profit margins and a net balance of 45% anticipate being forced to make job cuts over the period. As recently as the first quarter of last year, Chartered Surveyors in the construction industry were still looking to add to, rather than lower the headcount.

Says Simon Large, RICS South West spokesperson and managing director of MAGNA Chartered Surveyors:

“Nationally, the pressure on the construction sector shows no signs of abating at the moment. Indeed, if anything it appears to be intensifying as the weakness in the housing sector spreads to both commercial and industrial workloads.

“With profits being squeezed, significant job cuts are likely to result. The danger is that this will lead to a permanent loss of skilled labour which will leave the construction sector ill-equipped to play a meaningful role when the economy does begin to emerge from the current recession. The picture in the South West is similar but there are at least some indications that we are faring slightly better than other parts of the country in certain sectors.’’