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After the season of strong growth, a pause for breath

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The RIBA Workload Index data for August shows a general plateau in expectations of work (except in the North) with prospects for private housing continuing to fall, says Adrian Dobson

The RIBA Future Trends Workload Index was little changed in August 2015, dropping just one point to +21, down from +22 in July. After the highs of spring and early summer, the profession appears to be continuing to pause for breath following a period of significant growth in workloads.

The note of caution is most prominent in areas in the South and East of England that have so far seen the greatest growth.

There is also a clearly marked softening in confidence about medium-term prospects for the private housing sector, indicating that practices feel that a temporary peak at least is being reached in this sector.

Northern cities are now seeing the most rapid growth in work in progress

In terms of geographical analysis, all nations and regions in the UK returned positive balance figures, but it is the North, with a balance of +42, that continues to have the highest optimism about future workloads, and it is northern cities, which lagged in the recovery cycle, that are now seeing the most rapid growth in work in progress. 

Practices in London (balance figure +17), the South (+12) and the Midlands and East Anglia (+14) are more cautious about further growth in workloads in the next quarter.

Analysing last month’s data in terms of practice size, large practices (51+ staff) with a balance figure of zero clearly feel that they are reaching a plateau in workload levels at present.

However, small practices (1-10 staff) with a balance figure of +18, and medium-sized practices (11-50 staff) with a balance figure of +36 remain optimistic that they will see further increases in workload over the coming three months.

Despite the recent correction in our headline index, our forecast remains firmly in positive territory, and the value of actual work in progress is still growing at a very healthy annual rate of 8 per cent.

In terms of different work sectors, the private housing sector workload forecast continued its recent downward trajectory, falling to +18 in August from +23 in July. 

The commercial sector workload forecast was slightly up, standing at +14 in August, compared with +13 in July. Our public sector workload forecast declined a little, down to -4 in August from -1 in July. 

Given the UK government’s deficit reduction strategy, our practices quite naturally anticipate that, while public sector capital spending on buildings is likely to remain an important source of work, growth in this sector is inevitably going to be very constrained.

The community sector forecast was unchanged, standing at +1 in August 2015.

As with the workload figures, the RIBA Future Trends Staffing Index also saw a further modest decline this month, standing at +7 in August, down from +12 in July.  It is important to note, though, that 96 per cent of our practices expect their permanent staffing levels to either increase or stay the same over the next few months, and the employment market for salaried architects remains buoyant.

Small practices (1-10 staff) returned a staffing index balance figure of +2 this month.  Medium-sized practices (11- 50 staff), with a balance figure of +32, and large practices (51+ staff), with balance figure of +20, are still more likely to be actively appointing new staff. 

There is plenty of anecdotal evidence of practices now having difficulties in recruiting experienced staff (see the AJ/Bespoke roundtable discussion, page 50) with specific skills, not just in London but across the UK, especially in some northern cities.

Commentary received from our participating practices continues to suggest that the majority of firms are seeing solid growth in workloads and a number of practices have reported that market conditions are enabling them to negotiate better fee levels. 

Overall the picture is one of continued increase in workloads, tempered by a consensus that in the coming months the pace of growth is likely to slow significantly.

 

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