NI construction picks up but still lag UK regions as skills and material shortages bite

A net balance of +8% of Northern Ireland respondents to the survey reported rising workloads, up from -18% in Q4 2020. However, whilst this represented the first reading in positive territory since Q1 2020, Northern Ireland continued to lag other UK regions where the recovery appears more pronounced.

There was also a significant disparity between sub sectors, according to the latest report. Whilst public housing (+75%) and Infrastructure (+51%) workloads were reported to be rising quite sharply, the net balances for private commercial (-50%) and private industrial (-61%) workloads were at the other end of the spectrum.

Labour shortages, material shortages and financial constraints were the factors most cited by respondents as limiting activity currently.

Looking ahead, expectations for workloads in 12 months’ time remain relatively subdued with a net balance of just +6% anticipating them to be higher. Respondents are more optimistic about hiring intentions though, with a net balance of +57% expecting to employ more people in a year’s time. However, with skills shortages being reported in the market currently, hiring could prove challenging.

The biggest concern regarding the outlook is profitability, with respondents expecting profitability to be squeezed further over the next 12 months.

RICS Northern Ireland construction spokesman, Jim Sammon, said: “Q1 saw another modest improvement in construction workloads after the very significant challenges of last year. Indeed, it is encouraging to see workloads move into positive territory and growth in some subsectors to be strong. However, it is concerning that Northern Ireland is lagging other regions, and the issues around skills shortages and material shortages are very real in the market and are impacting significantly on activity.”

Michael McCord, Senior Partner at Tughans, added: “The latest survey results chime with some of the other economic information we are getting at the minute in relation to a recovery taking place. There are clear signs that conditions in the market are improving and indeed it is encouraging to see hiring intentions for the year ahead so strong. The construction sector has an extremely important role to play in driving and supporting a recovery and it is extremely important that there continues to be investment in construction and infrastructure activity both to support the recovery and to enhance Northern Ireland’s competitiveness.”

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