Today’s construction survey released by the surveyors’ body RICS adds more weight to the fears that construction is set for a plunge back into recession, showing as it does that more surveyors are seeing workload falling than rising.
Asked whether workload had increased or decreased on the previous quarter, the survey found a negative balance of 10% which follows on from a negative balance of 5% in the previous survey three months earlier.
This suggests that workload is falling among surveyors, although the survey measures the balance of positive and negative responses and not the quantity of work, so the figures don’t relate to actual levels of work.
Indeed in normal circumstances most firms tend to record their level of work as stable.
But the survey does give a guide to turning points in the fortunes of the industry and because this survey measures surveyors changing workloads it does normally provides a lead indicator of changes in work on the ground.
The graph above shows those firms enjoying a rising workload (red), those seeing work fall (blue) and the balance (black). The green line is the balance of expectations of workload in a year’s time. It shows a 19% majority of pessimists over optimists for the third quarter of this year.
Firms’ views of their expectations do unsurprisingly tend to draw sentiment from the current state of play, but what is clear from this line is that surveyors currently have a pretty gloomy view of the year ahead.
And if we look at the disaggregated numbers it shows that all sectors are weakening, although predictably the public non-housing sector looks the weakest.
But for those who are looking for the private sector to bail out the industry this survey provides little in the way of succour.
So it would seem that the prospects for recession are pretty widespread across the industry sectors. And the same is true when we look at the disaggregated figures for regional performance.
In that sense it would seem the whole of the construction industry is sharing in the pain.
Meanwhile, to illustrate the historic link between the RICS survey and construction output I have also compiled a graph (see right) which sits the ONS quarterly seasonally adjusted volume index of construction output on top of the RICS construction workload balance.
The picture rather speaks for itself