RICS flags improving construction sector

The latest RICS Construction Market Survey suggests the sector edged upwards in the first three months of 2012 - contrasting with the sharp fall in output suggested by official economic data.

Some 8% more chartered surveyors reported increases rather than decreases in workloads during the first quarter of the calendar year, described as a “notable improvement” on the negative reading seen towards the end of last year.

The institution said the finding reflected a “marked contrast in performance between the private and public sectors”, with the former picking up in the commercial sector in particular, while public sector construction remained depressed.

Last month the Office for National Statistics said a 3% decline in construction sector production was a significant factor in the UK economy’s return to recession.

The RICS said an important aspect of its latest construction sector survey was that some 21% of respondents expected workloads to rise over the coming 12 months - the most positive reading since 2008.

RICS chief economist Simon Rubinsohn said there was a cautious level of optimism developing. “Workloads rose across the sector, albeit modestly, and this looks as though it could continue over the next twelve months,” he said.

“Promisingly, this could also result in an increase in the numbers of jobs created in the sector.

“There are of course still significant hurdles to overcome. Finance for development remains a problem as does macro-economic uncertainty. On top of this, the public sector will continue to scale back its capital spending programme putting ever more pressure on the private sector and institutional investors to deliver.”

Surveyors in most parts of the country saw either a rise or a steadier trend in workloads from the beginning of January to the end of March.

Those in London and the south-east reported the highest rises in overall activity, while those in the north recorded the first positive reading since the final quarter of 2007. The picture in Northern Ireland was described as “more problematic”, with activity levels still slipping.

Overall input costs - such as raw materials and labour - continued to increase in the three months to March as a net balance of 29% more respondents reported rises in outlays. The most significant increases in costs were seen in materials, while staffing costs remained flat. 

New data from Savills Building & Project Consultancy underscored the RICS  findings in relation to commercial property.

It found rising development in the sector in April for a second consecutive month, with the Total Commercial Development Activity Index, a net balance monitoring the overall performance of the UK commercial property sector, registering an 8.1% increase in April, following a 13.1% rise in March.

Michael Pillow head of building consultancy at Savills said the figures raised further questions on the official statistics in relation to construction output.