Challenges Remain Within NI's Construction Sector

New figures have revealed challenges remain within Northern Ireland's construction sector.

The latest Royal Institution of Chartered Surveyors (RICS) and Tughans Northern Ireland Construction & Infrastructure Market Survey for Q2 2018 reveals workloads were broadly flat for the fifth quarter in a row, with a net balance of +2% respondents stating workloads had increased.

With this figure significantly below the UK average of 15% and below all other UK regions, private housing was the only part of the sector reported to be in growth mode, with a net balance of 28% of respondents stating they had experienced growth between April and June this year.

According to the survey, infrastructure and public non-housing workloads continue to face serious challenges, with the balance of respondents (-24%) in both sectors saying workloads had decreased. Less significant falls in activity in the public housing and private industrial sector were also recorded while private commercial sector activity was said to be flat.

NI surveyors are also the least optimistic on their future prospects, with a zero net balance for 12-month expectations, compared with an average net balance of 41% across the rest of the UK. When it comes to expectations around employment and profit margins for the next year, NI's figures are both in negative territory at -5% and -20% respectively.

While there was a rise in the number of surveyors saying there are shortages of quantity surveyors, other construction professionals and blue collar workers, these figures are much lower than those reported in the rest of the UK. 33% of NI respondents cited shortages in this area compared to 58% for the UK as a whole.

Jim Sammon, RICS Northern Ireland Construction Spokesman, said while it is encouraging that housebuilding is continuing to grow in Northern Ireland, the picture presented by the survey is somewhat different across the rest of the industry.

"Perhaps unsurprisingly, Northern Ireland surveyors are feeling less optimistic about the outlook than they were," he said.

"Our respondents are telling us very clearly that without a functioning Executive they have serious doubts about the ability of departments to approve strategic planning decisions and future expenditure on major projects. This is a situation that needs urgently addressed, particularly in relation to infrastructure activity.

"A lack of clarity on Brexit is also being cited as a major issue for the local industry because it leaves companies unable to make firm plans for the future.

"It is noteworthy though that respondents continue to report skills shortages, perhaps driven by the continuing growth in house-building. This highlights the important need to continue to invest in skills and to encourage young people to opt for a career in surveying and the wider construction sector."

Tim Kinney, Construction Partner, Tughans, said a further upturn in housebuilding is welcomed, yet it is the only brightspot in a challenging environment "which is being exacerbated by the lack of decision-making to push forward key infrastructure projects".

"Indeed, the latest official construction output statistics point to a worrying decline in government spending, with £590.1m of new public sector work in 2017, compared with £641.8m in 2016," he said.

"In the first quarter of 2018 output decreased by 6.5% compared with Q4 2017 and was 6.1% lower compared with the same quarter in 2017."

(LM/MH)