RICS report shows surveyors expect workloads to hold up in short term but are gloomy about next year.
Doubts about the economy have led to "a substantial loss of confidence" in the construction industry, the RICS reports.

Its latest quarterly survey shows that surveyors are optimistic in the short term, with 26% more expecting workloads to rise in the fourth quarter than those expecting a decrease. This is down slightly on the same period last year, when the figure stood at 38%.

But looking ahead to next year, just 2% more surveyors expect workloads to continue rising. A spokesperson for the RICS described this as a significant swing.

The report was released as crane hire firm Baldwins issued a profit warning, saying demand for its heavy crane division had dropped significantly and operating profitability was below expectations.

Managing director Rick Barnett said: "There is, quite simply, not the volume of big projects around the UK at the moment."

He said the fall in demand was not because of project cancellations but because of a decrease in the number of projects going ahead.

This indicates things are slowing down

Alastair Stewart, City analyst

Analyst Alastair Stewart, of Credit Lyonnais Securities, said this was one of the first signs of a downturn in the commercial market. He said: "This is a decent indicator that things are slowing down. It doesn't bode well."

The Halifax bank also warned this week that the long-predicted slowdown in the UK housing market had begun. The bank said average house prices had remained static in September at £94,000.

There is concern that the uncertainty following the terrorist incidents in the US could also affect UK consumer confidence.

The RICS survey, of 122 building surveyors, was conducted before the 11 September attacks on New York and Washington. RICS economist Ryan Emmet said it was too early to gauge how severely events in the USA would affect the market. He added: "When shocks like this happen, it certainly has a negative impact on business confidence and that will feed through to investment projects."

The RICS survey found that confidence varies around Britain. In Wales and the South-west, for example, 23% more surveyors expect workload increases over the next 12 months than those that expect downturns, though this was down on the 44% figure for last year.