Scottish construction workloads fall but surveyors more positive about year ahead
Activity on the Scottish construction sector has fallen for another quarter as businesses grapple with the economic effects of the COVID-19 pandemic, however, workloads have fallen at a reduced rate compared to the previous quarter and expectations for the year ahead have turned positive.
According to the latest Construction and Infrastructure market survey from the Royal Institution of Chartered Surveyors (RICS), whilst overall construction workloads were lower, with a net balance of -18% recorded, this was an improvement from -43% in the previous quarter’s survey.
Breaking down across each area, workload balances improved from low levels across all subsectors (i.e. public housing, private housing, private industrial, infrastructure, other public works) other than private commercial. However, despite the improvement, workloads are still flat or falling across all areas.
Looking ahead, respondents on balance expect construction workloads in Scotland to be higher in a year’s time than they are currently. This is a marked improvement from three months ago, with the 12-month workload expectation balance having improved from -17% in Q2 to +33% in Q3.
And whilst Scottish surveyors expect profit margins to be squeezed in the next 12 months, they now expect employment levels to be broadly flat in that timeframe.
Anecdotally, Scottish surveyors cited factors including the general impact of COVID on their operations and on demand, as well as the need for a more coherent infrastructure strategy from the Scottish Government, as issues for the market.
At the UK level, cross-sector workloads fell by a net balance of -7%, but this is less than the previous fall of -36% in Q2. However, when compared with last year’s industry average of +11% it shows UK construction is far from full recovery.
Commenting on the UK picture, Simon Rubinsohn, RICS chief economist, said: “These are clearly very challenging times for the economy. Government’s commitment to delivering on its infrastructure programme provides a ray of light with the survey pointing towards a solid increase in workloads over the next twelve months which could play an important role in helping to drive a wider recovery in business activity.
“The private residential sector is also expected to see solid growth aided by the various policy initiatives that are still in play. However, commercial development is anticipated as being flatter in the face of the structural pressures facing both offices and retail.”