Business

Construction sector will help drive recovery next year

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Jim Sammon

ANYONE who was in any doubt about the impact of Covid-19 on the construction sector need look no further than the latest construction output figures from NISRA.

They highlight the huge fall in Northern Ireland construction activity in the second quarter of this year as a result of the measures taken to reduce transmission of the coronavirus.

The total volume of construction output in the second quarter of 2020 decreased by 30 per cent compared with Q1 2020. It was also 30 per cent lower than the same quarter in 2019. And both the quarterly and annual decreases in Q2 were the largest on record.

The decrease in overall output in Q2 from the previous quarter was driven by a 32.9 per cent decrease in new work and a 16.7 per cent decrease in repair and maintenance.

All three construction sub-sectors (housing, infrastructure, other work) showed a decrease when compared with the previous quarter. Both housing (-37.5 per cent) and other work (-25.2 per cent) reached series lows.

More recent figures from the RICS and Tughans survey point to a better picture in quarter three than in quarter two with the rate of workload decline having eased. But, concerningly, overall workloads were still reported to be falling.

Breaking down across each area, balances improved from very low levels in the private housing, private industrial and private commercial sectors, but were all still either flat or falling. Workloads were also still falling markedly in the public housing and infrastructure sub sectors.

Looking ahead, respondents on balance expect construction workloads in Northern Ireland to be lower in a year's time than they are currently. But they are less pessimistic than they were three months ago.

Figures from RICS at a UK level suggest that UK construction output will rise 10 per cent over the next four years. A sharp fall in 2020 (down 18 per cent) will be offset by a bounce back in 2021 (up 12 per cent) followed by relatively strong annual growth of between 5 per cent and 7 per cent in 2022-2024.

From a Northern Ireland perspective, the ongoing Covid situation and the upcoming end of the transition period regarding the UK leaving the EU mean that the economic outlook for 2021 is uncertain.

But one thing that is clear is that the construction sector will have an important role in economic recovery. The sector can be a catalyst to help kick start the economic recovery. Construction provides skilled jobs and a fast return on investment.

More importantly though, construction can be part of a longer-term sustainable recovery, creating the infrastructure the economy and society needs to thrive into the longer-term. We need to properly fund and upgrade our water infrastructure, we need to invest in our transport infrastructure, our communications infrastructure and other aspects of our infrastructure.

A recently published CBI report noted that Northern Ireland lags behind its neighbours in terms of long term thinking for strategic infrastructure and said that planning has long been identified as a major obstacle to timely and efficient delivery.

It also advocated something RICS has long called for – an independent infrastructure commission for Northern Ireland. Such an independent body would help develop an objective, long-term strategy to deliver strategic infrastructure in the best interests of the economy and society.

2021 will no doubt be a year with numerous challenges, however there is the opportunity to reset our approach and to build on the infrastructure minister's creation of an infrastructure panel.

We shouldn't underestimate the importance of construction and infrastructure in economic recovery and the long-term success of the Northern Ireland economy.

:: Jim Sammon is construction spokesman of the Royal Institution of Chartered Surveyors (Rics) in Northern Ireland, which represents professionals employed in the land, property and construction sectors. In Northern Ireland, the organisation represents over 3,000 cross-sectoral members comprising of chartered and associate surveyors, trainees and students.

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