RICS Highlights Construction Contraction

The divergence in performance between the construction sector in Northern Ireland and in other parts of the UK grew further in the second quarter of the year.

This is according to the Royal Institute of Chartered Surveyors (RICS) Construction Market Survey for the second quarter of 2011.

London and the South East of England experienced growing construction workloads between the beginning of April and the end of June, whilst Northern Ireland, at the other end of the spectrum, continued to experience significantly contracting workloads.

NI remains the UK region with the largest number of construction sector chartered surveyors experiencing declining workloads, with a net balance of -64, compared to a UK average of +2, and +17 for London and the South East.

All construction sub-sectors in Northern Ireland experienced a fall in activity during the three-month period, according to the study. Expectations for the construction sector in NI also remain negative, with expectations for further falls in workloads, employment and profits.

"We're seeing no let-up in the recession in the local construction sector, as the continuing decline in public spending and the unavailability of finance to support construction projects continues.

"But, whilst public money is tight, there are things that can be done to help create an enabling environment for the construction sector, which is, after all, key to Northern Ireland's economic future," said RICS Northern Ireland Construction Spokesman, Jim Sammon.

"We would call for the fast-tracking of economically important planning applications, and the introduction of measures to raise additional revenue to help ensure money is available for capital spending.

"Joined-up working in Government is also extremely important to ensure an efficient and prioritised investment strategy that delivers where and when it is needed," he concluded.


In other business news today, NI's recovery appears to have "struggled to take hold" over the first half of this year as the short-term pressures piled up and growth of more than 2% is not expected until 2012, according to Northern Bank Chief Economist Angela McGowan.

The latest Northern Bank report indicates that the construction sector, which currently represents 6.5% of the local economy, is still working as a drag on the local economic performance with an expected annual contraction of 3.1% this year.

The mining and quarrying sector is also a poor performer due to its connectivity with construction.

The news is contained in the latest 'Quarterly Sectoral Forecast' report published by Northern Bank has maintained its annual growth forecasts of 1.1% for 2011 but has increased the chances of the economy slipping back into recession by five percentage points from 15 to 20%.

The report notes that the local economy like many international economies was exposed to a number of pressures in the first half of 2011.

A myriad of factors ranging from high inflation, an oil price shock and the Euro sovereign debt crisis all worked to keep local economic growth at a very subdued level.

Northern Ireland still faces its own local pressures stemming from public expenditure cuts, relatively low consumer confidence and subdued demand all of which will continue to keep growth below par.

Ms McGowan explained: "The underlying picture for the Northern Ireland economy remains one of a painfully slow recovery.

"In a similar fashion to the UK economy, Northern Ireland’s recovery has been hampered by some global setbacks such as the oil price shock earlier this year.

"Growth is also being held back at the local level by declining private disposable income, a slump in private consumption and weak business investment stemming from heightened uncertainty," she said.

The report indicates that patchy and uneven growth currently prevail and it is widely recognised that some sectors are performing significantly better than others.

Agriculture and manufacturing continue to grow at higher than average levels, 4.5 and 3.3% respectively, due to strong demand for commodities and the fact that these sectors are able to tap into international markets.

Growth in the media sector she said has been driven primarily by the media sub-sector, which has experienced notable film and TV production success in Northern Ireland in recent months.

NI's distribution sector is continuing to perform well and benefit from the growth in agriculture and manufacturing. Although growth is expected to be modest in this sector, its employment forecast is to remain well below the boom level peaks due to retail job losses.


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