Growth expected to continue despite public spending drop

Construction industry growth has speeded up in the past quarter and surveyors are predicting the trend to continue despite the expected slowdown in public spending. Industry growth has accelerated for the second consecutive quarter, while the chartered surveyors are "very optimistic about future workloads and employment", according to the RICS construction market survey for the first quarter of 2006.

The survey findings come despite a warning that northern areas of the UK are set to suffer from a slump in public spending. The north will be the most heavily affected by a slowdown in public sector construction, according to the Foresight report on regional construction by economic forecasting group Experian. The North is particularly vulnerable to the slump because of its heavy reliance on public sector clients, said James Hastings, associate director of Experian's business strategies division. He also said the "relatively dormant housing market" would last longer in the North because there is greater long-term demand in the South. Experian predicted that although construction would rise 13% by 2008 across the UK as a whole, growth would be weaker in the regions, including the East Midlands, Northeast and Scotland, and particularly Yorkshire and the Humber.

QSs were undaunted by the research. Ron Thompson, founder of Edinburgh's Thompson Gray Partnership, said "Public investment is still where it's really happening. PFI just keeps on going."

Ann Bentley, operations director of Bucknall Austin in Birmingham, said "It takes a long time to turn the public sector tap off because very often they commit to expenditure two or three years in advance."

It takes a long time to turn the public sector tap off

Ann Bentley, director of operations, Bucknall Austin

Such views were reflected in the RICs report, which found that surveyors were bullish regarding expected workloads for the coming 12 months, with expectations well above the long run average.

The RICs said confidence across the industry was likely to have been boosted by the continued recovery in the overall economy and particularly buoyancy in the housing market. It found that 23% more surveyors reported a rise in activity rather than a fall, up from 20% in the last quarter of 2005. The supply of labour was also found to have improved, with only 28% of the survey's 178 respondents reporting a shortage of skilled workers.