Findings from the Royal Institute of British Architects' (RIBA) October Future Trends Survey have revealed that architects are more optimistic about their commercial outlook, for the first time since February 2010. This renewed confidence is verified within every key indicator, including staffing levels, predicted workload, and across all sectors.
The number of practices expecting workload levels to decline dropped 6% from 34% in September, to 28% October; 22% of practices expected workload to increase in October, compared to 20% in September, demonstrating a 2% rise. Employment prospects for salaried architects also grew more optimistic, with 8% of architects expecting an increase in staff in October, compared to 5% in September; the number of practices expecting staff levels to drop fell 4% from 20% in September to 16% in October. Levels of underemployment saw an 8% drop, with 27% of architects stating they were underemployed in October, compared to 35% in September.
All of the sector forecasts this month demonstrated increases, with the private housing sector forecast exhibiting the strongest rise to +4, up from -3 in September 2010, moving back into positive territory (17% of architects expected housing work to decline, compared to 23% in September); the commercial sector forecast now stands at -6, up from -10 last month. At -33 the public sector remains the most uncertain sector, with 39% of architects expecting public work to decline. Practices heavily committed to public sector work report greater uncertainties over future fee levels and difficulties in medium-term cash flow forecasting, however, despite the on-going uncertainties many public healthcare and educational projects are going ahead.
The statistical analysis of the survey enables the RIBA to regularly report on two key confidence tracking indices relating to future workloads and staffing levels. For October 2010, the RIBA Future Trends Workload Index is -6 (compared to -14 in September 2010) and the RIBA Future Trends Staffing Index is -8 (compared to -15 in September 2010).
"The RIBA Future Trends Staffing Index for October 2010 is -8, up significantly from -14 in September. We have seen that smaller practices (balance figure -3) remain much more upbeat about future growth in staffing numbers than medium (balance figure -20) and large practices (balance figure -56)," said Adrian Dobson, RIBA Director of Practice.
"London (balance figure +2) and the South of England (balance figure +12) are beginning to exhibit increased confidence levels, supported by an increase in activity in the London commercial sector, and sustained workload levels in the high-end residential markets in both London and the home counties. A number of practices have also reported optimistic signs in the leisure and retail market, and our view is that a sustained increase in activity in the key commercial sectors will be the first indicator of recovery with real momentum.
It is important to recognise that, whilst in terms of actual workload we have seen something in the order of a one third reduction since the peak of the boom, there remains a significant amount of on-going construction activity. Residential projects, particularly for individuals with access to private capital, who are not heavily dependent on borrowing, remains buoyant, and London in particular is seeing high levels of commissions for overseas residential property buyers. Concerns however remain about the potential impact of the planned VAT increase on domestic schemes."