Gaps in Government support for construction could lead to ominous future
Following the introduction of social distancing measures to stop the spread of coronavirus, the RICS Q1 2020 UK Construction and Infrastructure Market Survey results are unsurprisingly consistent with a sharp deterioration in momentum.
Headlines:
- Workloads fall back as lockdown measures come into force
- RICS market confidence indicator slips to a decade low
- Profit margins anticipated to fall over the coming twelve months
The headline workloads indicator has moved into negative territory for the first time in almost eight years, and market confidence has fallen sharply. As such, the majority of contributors envisage a fall in workloads and profit margins as well as a decline in new hiring in the coming year.
However, the survey responses when analysed by date of submission clearly show weaker sentiment coinciding with the stricter lockdown. Survey responses that were received from 5th March till the 26th of March were still indicating a broadly resilient picture for the sector, with the majority of contributors reporting a pick-up in headline workloads (net balance of +16%).
After this date, between 27th March and 7th April, responses unsurprisingly signalled a sharp downturn in workloads with a net balance of -21% of respondents reporting a decline.
Bringing this together, the headline workloads net balance for Q1 2020 came in at -3% (compared +12% in Q4 2019). Sector wise, momentum slipped across all market segments apart from infrastructure, where contributors reported a modest rise in activity (net balance of +11%). Private and public housing workloads stagnated in Q1, while activity fell in the private commercial and industrial sectors.
Kindly shared by Royal Institution of Chartered Surveyors (RICS)
