Workloads may still be rising but, following Britain’s vote to leave the EU, confidence is in negative territory for the first time since 2012, writes Adrian Dobson
The RIBA future trends workload index saw a significant fall last month – down to -7 in July compared with +22 in June.
This is the first time our key workload confidence index has entered negative territory since 2012. The data in this month’s survey was collected in the period shortly after the EU referendum, and clearly this result reflects a change in sentiment since the vote.
Commentary received from our participating practices reinforces the sense that this fall in confidence is driven by concerns about the implications of Brexit. But while a very small number of practices state they have seen projects cancelled or postponed as a direct result of the referendum outcome, the sense is that the fall in our index reflects anxiety about the future impact of leaving the EU rather than an immediate change in the workload pipeline.
Only time will tell if this change in sentiment is an overreaction to political events, but the fall must nevertheless be a cause for some concern.
In terms of geographical analysis, only Wales and the West (balance figure +14) returned a positive balance figure. It is London (balance figure -16) that has seen the biggest fall in confidence about medium-term workload prospects.
Analysing this month’s data in terms of practice size, large practices (51+ staff), with a balance figure of -33, and small practices (1-10 staff), with a balance figure of -7, have seen the greatest drop off in confidence levels. Medium-sized practices (11-50 staff), with a balance figure of +8 have seen a cooling in sentiment, but do on balance take the view that direction of travel for workloads will still remain positive.
Our survey results seem to reflect anxiety about Brexit implications rather than any immediate falling off in revenue growth – actual workloads are growing at 3 per cent
In terms of different work sectors, the public sector workload forecast fell this month, standing at -5 in July down from +3 in June. The community sector forecast saw little change, down to -4 from -3.
The overall decline in our headline index is driven by falls in both the private housing sector and commercial sector workload forecasts. Private housing sector workload was down to +4 in July, from +19 in June, but stayed in positive territory. It was the commercial sector workload forecast that saw the biggest change, falling 28 points to stand at -17 in July, down from +11 in June.
While there has been a shift in confidence levels, our quarterly figures for the value of work in progress show actual workloads growing at a healthy annualised rate of 3 per cent, so our survey results very much seem to reflect anxiety about Brexit implications rather than any immediate falling off in revenue growth.
The RIBA Future Trends Staffing Index also declined somewhat this month, standing at +4 in July, down from +14 in June. The fall in the Staffing Index was much less marked than that in the Workload Index – 90 per cent of our practices expect to have the same number or more staff in three months’ time.
Small practices returned a Staffing Index balance figure of +3 this month. Medium-sized practices with a balance figure of +12, also remained positive about future staffing levels. Large practices (51+ staff) were most circumspect about future staff numbers, with a balance of zero.
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Anecdotal commentary received from our participating practices this month was dominated by the Brexit decision. Only a very small number of practices reported an immediate impact on projects, though many said it was too early to say what the effect on their workflows might be. A good number, however, stated that they were not expecting to see any changes to work levels as a result of the referendum.
In reality many practices seem to be in a wait-and-see position. The RIBA Future Trends survey has recorded a continuous increase in the value of work in progress since mid-2013, and the profession has been increasing in economic strength with staffing levels also rising strongly. At the moment the sense is one of a profession pausing for reflection to see if that momentum will continue or not.
Adrian Dobson is executive director members at the RIBA and author of 21 Things You Won’t Learn in Architecture School