Construction jobs stabilise in Northern Ireland and Scotland

Jobs in the construction industry will likely stabilize in the second half of 2009 in terms of new building contracts, according to Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, even if it is still too early to speak of the 'light at the end of the tunnel.'

The residential sector has been the most affected one by the current economic crisis, but the commercial developments sector is also facing problems in the downturn.

Rubinsohn explains, "We've probably seen the worst of the collapse in output, but I'm not sure [it will] take off very quickly. It's going to be a fairly long haul, but we've probably seen the worst of the adjustment downwards."

The construction industries in Northern Ireland and Scotland have stabilised somewhat because of the rise in public sector building contracts according to June’s Glenigan Index.

Scottish construction industry has witnessed some peaks recently, mostly thanks to the civil engineering sector, in which the number of project starts grew 50 percent last year.

The utilities sector recorded a 16 percent rise in the value of planning approvals in 2008 and has stayed strong in the first four months of 2009. A number of wind farm construction plans are underway and Scottish Water is expected to continue with a strong investment program.

The private housing construction in Scotland, on the other hand, has been hit hard by the crunch: in the five months leading to May 2009, project starts fell by half compared to the previous year and are now at a three years’ low.

Experts predict that the construction sector in Scotland will improve in 2010. While the value of underlying construction starts will fall by 2 percent this year, a modest return to growth is expected in 2010.

In June, the Scottish Government announced construction plans for 1,343 council homes – a project worth £26m – and housing and communities minister Alex Neil acknowledged that the sector had been overlooked of late, but said that things were looking up: “Scotland’s housing stock has been left to wither on the vine. Backed by record funding, we are now working with councils across Scotland to reverse decades of decline in council house building.”

Commenting on construction industries in all regions in the UK, Glenigan economics director Allan Wilén said: “Glenigan forecasts that the recent recovery in public sector starts will gather momentum during the second half of 2009. This will drive the overall stabilisation in construction project starts. Growing pressure on Government finances will temper this momentum in the medium term, however.

“We expect the current divergence in between the housing sector to widen over the coming months with an increase in social housing projects contrasting with a depressed private sector development which remains constrained by poor conditions in the wider housing market. The fortunes of non-residential construction will be mixed. Civil engineering projects starts will strengthen as new renewable energy, rail and road schemes commence.”

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