Industry challenges continue to weigh on NI construction workloads but skills shortages remain acute

The RICS NI Construction Monitor for the first quarter of 2023 indicated that activity in Northern Ireland’s construction sector remained in negative territory at the beginning of this year as the industry continues to face a challenging economic environment according to the latest Royal Institution of Chartered Surveyors (RICS) Construction Monitor.

Workloads in Q1 2023 remained in negative territory for the fourth consecutive quarter, with a net balance of -26% of respondents reporting a fall in workloads. All subsectors in NI were reported to have experienced a decline in workloads in Q1. A net balance of -18% of surveyors reported falls in public housing, -31% in private housing, -29% in private commercial, and -12% in infrastructure. Private industrials saw the largest quarter-on-quarter change, falling from -21% in Q4 2022, to -39% in Q1 2023. Looking ahead, Northern Ireland respondents are less optimistic than counterparts elsewhere in the UK, expecting workloads to decline over the next year. The net balance for Northern Ireland is now –26% compared to 15% for the UK as a whole. The skills shortage across the industry continues to be a key challenge despite the falling activity, with more surveyors reporting shortages in skills than the quarter previous. In Q1 64% of surveyors reported a shortage of quantity surveyors, up from 50% in Q4 2022.

Shortages in construction professionals stayed similar between Q4 last year and Q1 this year with 50% of respondents reporting a shortage and shortages of bricklayers remained similar quarter on quarter with 56% reporting a shortage in the most recent survey. With rising material and labour costs, profit margins have been squeezed and are expected to remain negative, with a net balance of -41% recorded for 12-month profit expectations. This figure was reported to be -11% at UK level.

Jim Sammon, RICS NI Construction Spokesman, said: “The industry continues to face significant challenges with cost increases and declines in workloads, and continued skills shortages. We can see that surveyors in Northern Ireland aren’t as optimistic as can be seen in other parts of the UK.

Northern Ireland hasn’t had a functioning government which makes things more challenging for the construction sector. Public sector work is a huge part of construction activity in NI and without an Executive, there is a lack of certainty about budgets and the pipeline of work. RICS in Northern Ireland is calling for a working NI Executive to ensure that necessary investment in the economy and our infrastructure can be delivered efficiently and in a timely way.”

Commenting at UK level, Simon Rubinsohn, Chief Economist, RICS, said: “The negative mood around development has eased somewhat in recent months with the workload trend stabilising away from infrastructure where the trend remains more positive. A key challenge for the sector continues to revolve around labour shortages in general and skills in particular. Unless addressed, this could prove to be a significant drag on the ambitions of the construction industry. “Unsurprisingly, credit conditions remain restrictive for now but there is a sense that they could ease as the year wears on. Whether this improvement materialises remains to be seen in the face of the ongoing banking stress in the US and how this plays out around the globe.”