Construction 'depressed but improving'

CONSTRUCTION in the East of England is showing modest signs of improvement but remains depressed, latest studies indicate.

A Royal Institution of Chartered Surveyors (RICS) market survey published yesterday found workloads continued to fall in all parts of the construction industry in the East of England and across the UK - except for the non-housing public works sector which has benefited from an injection of state spending.

Meanwhile another study indicated that small builders believed the market was improving.

The RICS survey found workloads in the region remained depressed for the fifth consecutive quarter - but there was a slight improvement from the last quarter with 39% more surveyors reporting a fall rather than a rise in overall workloads compared to 43% in the last quarter

However, this compared with a better national figure of 26% more surveyors reporting a fall, up from 45% in the previous quarter.

There were tentative signs that increases in state spending starting to filter through into new projects were starting to have an impact.

Homes warranty provider National House Building Council (NHBC) said the market was improving for small builders.

It said its Small Builder Barometer found that 41% of small builders believed they would feel the positive effect of market recovery within a year, with 18% saying it would take just six months for them to notice the benefits.

Other small builders indicated there was still some way to go, with 12% saying they hoped to benefit from an upturn within two years.

NHBC chief executive Imtiaz Farookhi said the industry had been quick to assess the difficulties of the bigger house building and construction firms, but said it was important to consider the issues smaller firms faced.

“These smaller firms are integral to the industry and feel the effects of a recession all the more acutely,” he said.

“If the housing market recovery is to take hold, then small builders must be given assistance on the long road back to a healthy future.”

RICS said the outlook for the next 12 months in the East of England was still depressed, albeit less so than in the previous quarter.

“Optimism for workloads is creeping towards positive territory, but this quarter still more chartered surveyors in the region said they expect workloads to fall rather than rise over the next 12 months. Employment expectations over the year ahead have also improved in the region, but again more chartered surveyors this quarter said they expect employment to fall rather than rise,” RICs said.

It found confidence most negative in the region and across the UK in relation to profit margins. In the East of England, more than 60% of chartered surveyors said they expect profits to fall over the next 12 months, a marginal improvement on the last quarter, when the figure stood at 80%. Nationally, the picture was slightly better, with 48% anticipating a further squeeze.

“Activity is still declining across the construction sector, but state spending is providing some much-needed support for the construction industry,” said RICS East operations director David Potter.

John Button of Castons in Ipswich said: “There is still a reliance of government spend.”

* Sector Skills Council ConstructionSkills has secured �1million of funding from the National Apprenticeship Service some of which will help support construction firms in the East of England to take on apprentices who have been laid off during the recession.

Companies able to provide suitable apprenticeship employment and support them to complete their training will be eligible to apply for up to �1,000.

For more information, visit wwwlcskills.org or www.apprenticeships.org.uk.