NI: Construction sector lags behind rest of UK

NI: Construction sector lags behind rest of UK

Michael McCord

Northern Ireland’s construction sector is lagging behind the recovery in other UK regions, according to a new report published by RICS and law firm Tughans.

A survey of construction businesses in Northern Ireland found a net balance of +8 per cent reporting rising workloads in Q1 2021, up from -18 per cent in the previous quarter.

The RICS and Tughans Construction and Infrastructure Monitor, Q1 2021 also found a significant disparity between sub sectors.

Whilst public housing (+75 per cent) and Infrastructure (+51 per cent) workloads were reported to be rising quite sharply, the net balances for private commercial (-50 per cent) and private industrial (-61 per cent) workloads were at the other end of the spectrum.

Labour shortages, material shortages and financial constraints were the factors most cited by respondents as limiting activity currently.

Looking ahead, expectations for workloads in 12 months’ time remain relatively subdued with a net balance of just +6 per cent anticipating them to be higher. Respondents are more optimistic about hiring intentions though, with a net balance of +57 per cent expecting to employ more people in a year’s time. However, with skills shortages being reported in the market currently, hiring could prove challenging.

The biggest concern regarding the outlook is profitability, with respondents expecting profitability to be squeezed further over the next 12 months.

Michael McCord, senior partner at Tughans, said: “The latest survey results chime with some of the other economic information we are getting at the minute in relation to a recovery taking place.

“There are clear signs that conditions in the market are improving and indeed it is encouraging to see hiring intentions for the year ahead so strong.

“The construction sector has an extremely important role to play in driving and supporting a recovery and it is extremely important that there continues to be investment in construction and infrastructure activity both to support the recovery and to enhance Northern Ireland’s competitiveness.”

RICS Northern Ireland construction spokesman Jim Sammon said: “Q1 saw another modest improvement in construction workloads after the very significant challenges of last year. Indeed, it is encouraging to see workloads move into positive territory and growth in some subsectors to be strong.

“However, it is concerning that Northern Ireland is lagging other regions, and the issues around skills shortages and material shortages are very real in the market and are impacting significantly on activity.”

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