Despite workloads
across the UK’s construction and infrastructure sector stabilising for year
end, uncertainty over the next stages of Brexit is still holding back
investment, according to the results of the Q4 2019 RICS Construction and
Infrastructure Market Survey.
This quarter,
workloads continue to rise with 12% more respondents seeing a rise in workloads
rather than a fall. It should be noted that - while positive - this
figure is well below pre-referendum results, when responses averaged a net
balance of 36%.
In Q4,
infrastructure has seen the strongest growth, with 17% more contributors
reporting a rise in workloads. Private housing also continues to see
strong growth, with 15% more chartered surveyors reporting a rise.
As a potential
visible impact of policy change, it is interesting to note that since the start
of 2019, workloads in public housing have also risen. An extra question was
added to the survey this quarter to ascertain the impact that lifting the
Housing Revenue Account borrowing cap has had on social housing. 34% more
surveyors reported an increase rather than decrease in expectations for council
house building workloads over the coming twelve months.
Activity in the
private commercial sector has also increased in Q4 with a net balance of 11% of
respondents seeing a rise, up from 2% in Q3. However, workloads in industrial
remain at a near standstill for the fifth consecutive quarter.
With 45% of the
responses to the latest survey coming in post the General Election result, the
RICS market confidence indicator rose to 35% in Q4, suggesting that the end to
some uncertainty has renewed confidence in the market.
Even with the
increase in workloads, respondents are still cautious over Brexit. Anecdotally,
respondents to the survey suggest this is one of the main reasons for holding
off on investment decisions. 25% more surveyors will likely decrease
investments on fixed assets including equipment and software in 2020, and 33%
more intend to curtail workforce development and training. However, when
asked how business enquiries for new projects or contracts have fared in the
past three months, 16% more respondents report an increase rather than a
decrease.
Also, despite
ongoing recruitment challenges, and with surveyors continuing to report full
order books, a net balance of 39% of respondents have increased their headcount
in the past three months. 42% of respondents still anticipate skills shortages
to impact growth across the sector for the future.
Jeffrey Matsu, RICS
Economist, commented: “While momentum across the industry has eased in recent
years, surveyors continue to report full order books and constraints on
capacity that suggest anything but a recession.
"The General
Election result last month provided a welcome relief to market confidence with
the anticipation of additional fiscal spending to be announced at Spring Budget
pushing year-ahead workload expectations higher. That said, the yet-to-be-known
relationship with the EU has kept the economic outlook fragile which is
affecting business' intentions to invest.”
