Caution despite positive construction news

NORTH East builders still believe a full recovery for the sector is some way off, despite a survey showing that construction workloads turned positive for the first time in two years.

The report, from the Royal Institution of Chartered Surveyors (RICS), shows that 5% more chartered surveyors reported a rise in workloads rather than a fall in the first quarter of 2010.

This represents an improvement in sentiment, with 12% more reporting falls during the last three weeks of 2009, and reverses a decline which has stretched for seven consecutive quarters.

Private commercial workloads showed an improvement, while public sector housing remained in positive territory.

However, the figures reveal significant variation in performance across both sectors and regions, with Northern-based chartered surveyors yet to move into positive territory despite seeing an increase in orders.

Despite some positive signs among the North East’s house builders in recent months, the survey showed that private housing is still in negative territory on a national scale.

Michael Henning, RICS North East construction market spokesperson and a chartered surveyor with Newcastle-based Summers Inman, said: “On the positive side, it looks like the patient is finally out of intensive care.

“There have undoubtedly been some positive signs in the market in recent months and the region’s surveyors are hopeful to see further improvements.

“However, the patient is still a long way from full recovery.”

Expectations for workloads in the UK over the next 12 months are stable with the net balance increasing slightly, with expectations in the North improving but remaining in negative territory.

Projects associated with the 2012 Olympics helped surveyors in London and the South East report a sharp turnaround in workloads, while an improved picture in the Midlands and East Anglia saw the net balance jump into positive territory by nearly 20 percentage points.

Hopes for increased employment and profits are fairly downbeat with surveyors expecting both further job losses and a contraction in margins.

This opinion is shared by Richard Brown, managing director of Newcastle-based Dorin Construction, who believes the industry has a long way to go before it returns to pre-recession trading conditions.

He said: “I welcome any reports that show signs of a recovery. I would hope the next report would be even better as many firms were hampered by the snow in January and February.

“However, there are a number of issues preventing a quick recovery, with a major one being the threat of inflation and materials prices.

“The industry is also holding out to see whether it will be affected by Government cuts.”

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