State spending boosts public sector

Published:  14 August, 2009

COVENTRY: Workloads continued to fall in all parts of the construction industry bar the non-housing public works sector which has benefited most from an injection of state spending says RICS construction market survey, published today.

Construction workloads remained in negative territory for the fifth consecutive quarter with 26% more surveyors reporting a fall rather than a rise in overall workloads, up from a net balance of -45 in the first quarter. However, workloads in non-housing public sector construction reached their most positive level since the fourth quarter of 2007 as the increases in state spending started to filter through into new projects in education and other areas. There are also some tentative that this is having an impact, albeit a lesser one on both public housing and infrastructure.

Private housing saw a significant reduction in the number of surveyors reporting falling workloads. As recently as the final quarter of last year, 66% more surveyors were reporting a fall in workloads. This figure lessened to 49% in the first three months of the year and 28% in the second quarter. The worst hit areas were the private commercial sector and the private industrial sector which recorded negative net balances of 41% and 39% respectively. 

The outlook for the next twelve months is still depressed albeit less so than in the previous quarter. Optimism for workloads is creeping toward positive territory with the net balance standing at a mere -8%. Confidence is most negative in regard to profit margins with 48% more surveyors anticipating a further squeeze.

Total workloads stabilised in Wales where the net balance was +1. Workloads also fell less markedly in London and the South East.

Commenting, Simon Rubinsohn, RICS chief economist said: "Activity is still declining across the construction sector but state spending is providing some much needed support for the construction industry with public sector works reaping the benefits. The improvement in news flow also appears to be filtering through to the private housing sector although workloads are still falling. Against this backdrop, the employment picture will deteriorate further with more redundancies likely to be announced in the sector over the balance of this year."

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