Northern Ireland’s construction activity at its lowest level since the first Covid pandemic lockdown

Northern Ireland’s construction activity is at its lowest level since the first pandemic lockdown.

According to the latest Rics and Tughans construction and infrastructure monitor, workloads fell in Q3 at the sharpest rate in more than two years, and they are expected to come under more pressure in the next 12 months. 

Infrastructure was the only subsector to experience growth in Q3.

A net balance of -29% of respondents was recorded for workloads in Q3-2022, the lowest figure seen since Q2-2020, in contrast to the UK as a whole where workloads continued to record strong growth, with 17% of respondents seeing workloads rise. 

Net balance reflects the proportion of respondents reporting a rise in workloads minus those reporting a fall, as such if 30% reported a rise and 5% reported a fall, the net balance would be 25%.

Private commercial (-32%) and private industrials (-50%) reportedly experienced the sharpest declines in workloads.

Activity in the private and public housebuilding sectors fell for the first time in three and eight quarters respectively. 

Looking to the future, Northern Irish respondents also expect workloads to decline over the next year.

With rising material and labour costs, profit margins have been squeezed and are expected to decline further, with a net balance of -46% recorded for 12-months. A further downward shift from -31% in Q2-2022. 

The pattern of labour shortages has continued also with 61% of respondents experiencing a shortage in quantity surveyors. 48% also reported a shortage of other construction professionals and 58% reported a scarcity in blue collar workers.

There is some good news though with indications labour shortfalls are expected to rise over the next year with 8% of respondents indicating they foresee an increase.  

Jim Sammon an RICS NI Construction spokesman said the lack of a functioning executive was damaging the sector: "Northern Ireland construction activity hasn’t had the same rebound since the pandemic that other parts of the UK have experienced, and the sector here faces a wide range of challenges including seemingly never-ending cost increases.

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. A functioning NI Executive is important to ensure that necessary investment in the economy and our infrastructure can be delivered efficiently and in a timely way.” 

Senior Partner at Tughans, Michael McCord added: "In these challenging times, it is clear that the role of government is more important than ever, in relation to capital spending, infrastructure and ensuring effective and efficient government and decision making that supports

 the private sector and the recovery. The construction industry has an extremely important role in helping drive a sustainable economic recovery in Northern Ireland. Investing in our infrastructure can play a central role in creating employment, driving spending in the economy, and ultimately improving Northern Ireland’s competitiveness for the long-term.” 

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