Business

Brexit and Stormont impasse blamed for flat growth in north's construction sector

Private house building was the only part of the north's construction sector to report growth in a slow second quarter

PRIVATE house building was the only portion of the north's construction sector to report growth in a slow second quarter, according to new research.

The latest RICS (Royal Institution of Chartered Surveyors) and Tughans Northern Ireland Construction and Infrastructure Market Survey has revealed an underwhelming three months to June within the sector, with overall workloads reported as flat (+2 per cent) for the fifth quarter in a row, significantly below the UK average and the lowest of all regions.

Infrastructure workloads and public non-housing workloads are also facing serious challenges according to the survey, with the balance of respondents (-24 per cent) in both sectors saying workloads had decreased between April and June

Less significant falls in activity in the public housing and private industrial sector were also recorded, while private commercial sector activity was said to be flat.

Looking ahead, local surveyors remain the least optimistic in the UK. The Northern Ireland outlook is flat, with a zero net balance for 12-month expectations, compared with an average net balance of 41 per cent across the rest of the UK.

A similar sentiment is shared around employment and profit margins for the year ahead, with both Northern Ireland figures now in negative territory.

Some positivity was reported through a rise in the number of surveyors stating there are shortages of quantity surveyors, other construction professionals and blue collar workers, but these remain well below the figures reported in the rest of the UK.

RICS Northern Ireland construction spokesman, Jim Sammon admitted it had been a challenging quarter for the sector.

“While it is encouraging that housebuilding is continuing to grow in Northern Ireland the picture presented by the survey is somewhat different across the rest of the industry, and, perhaps unsurprisingly, Northern Ireland surveyors are feeling less optimistic about the outlook than they were," he said.

Mr Sammon highlighted the lack of a devolved government and Brexit uncertainty as key issues going forward.

“Our respondents are telling us very clearly that without a functioning Executive they have serious doubts about the ability of departments to approve strategic planning decisions and future expenditure on major projects. This is a situation that needs urgently addressed, particularly in relation to infrastructure activity.

“A lack of clarity on Brexit is also being cited as a major issue for the local industry because it leaves companies unable to make firm plans for the future."

Tim Kinney, construction partner at Tughans said the figures do not make good reading.

"A further upturn in housebuilding is certainly to be welcomed, but it really is the only brightspot in an otherwise challenging environment which is being exacerbated by the lack of decision-making to push forward key infrastructure projects."

“Indeed, the latest official construction output statistics point to a worrying decline in government spending, with £590.1m of new public sector work in 2017, compared with £641.8m in 2016. In the first quarter of 2018 output decreased by 6.5 per cent compared with Q4 2017 and was 6.1 per cent lower compared with the same quarter in 2017,” he added.

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