Construction workload is falling and we should expect it to fall further. That basically is what the latest survey from the surveyors’ body RICS suggests.
The lines on the graph 1 are pretty clear. There are firms doing more work (blue line), but there are more firms doing less (red line). And on balance there is a majority of firms of the view that workloads will fall over the next 12 months (green line).
But given that this survey data included the snow-impacted days of December and given that the balance of firms expecting workload to fall has reduced, there is something within the figures for those determined to stay optimistic about the direction of construction activity.
The RICS survey, by virtue of its membership, does tend to provide a leading indication of what is likely to occur to the measured output provided by the national statisticians.
This we see in graph 2 which does suggest a lag between the findings of the RICS construction survey and the official measure of construction output .
So in that regard this will allay some fears there might be a catastrophic decline in work in the early part of this year as the public sector looks to balance its books to meet the savage cuts to capital spending penned into the Budget.
But the survey does contain other worrying signals.
Firstly, the private sector growth that is evident is very much built around the commercial sector in London. This may be reassuring as this is a critical sector for construction growth. But there will be a question over how much growth this single sector and single region can provide to offset falls elsewhere and also over how sustainable growth in this relatively narrow segment of the industry might prove in the longer run.
Add to this the growing evidence within the survey pointing to rising input costs and the expectation of falling profits and fewer jobs and there remain more worries than hopes for construction.
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