As part of our commitment to keeping on top of developments in the design and construction industry, earlier this year EBOSS conducted a survey on industry sentiment. We surveyed 843 architectural specifiers and 638 builders, with findings indicating that while confidence has declined from the high levels we saw in 2015, the NZ construction industry remains largely positive about the future.

Industry sentiment down but still positive

Architectural Specifiers:

Two in five architectural specifiers (43%) believe the construction industry situation will improve in the next 12 months. This is down from 56% in 2015.

While positive sentiment for the industry has declined over the last five years, the overall feeling is still optimistic going into 2020. Only 19% of specifiers believe the industry will decline, while the remainder expect the industry to remain stable. This sentiment is similar across commercial and residential, and across business size.

We also found that specifiers have more positive expectations for the future of their own businesses – 57% believe their business will improve in the next 12 months, while only 6% believe it will decline.

Practitioners with over 15 years experience were more likely to expect the industry to remain stable, while less experienced practitioners were more optimistic about the future.

Builders:

This year, much like in 2015, builders were more conservative in their sentiment toward the industry. Only 34% of builders surveyed anticipate an improvement in the industry in the next 12 months, while 31% expect the industry to decline. Seasoned builders with 20 - 40 years working in the industry were the most likely to believe the industry will remain stable.

Again, sentiment is more positive for builders’ own businesses. Only 9% believe their business will decline in the coming year.

When we compare results, we see that this year’s expectations have declined from the extremely positive results of our 2015 survey, where 48% of those surveyed expected the industry to improve, while 57% expected their business to do so.

The work is still flowing

There’s still a lot of work in the construction industry, with at least one third of specifiers and builders say they’re currently at 100% capacity. The average specifier is at 85% capacity and the average builder at is 80%. Commercial specifiers and builders are more under the pump than residential, as are larger businesses (also more likely to be focussed on commercial work).

Half of all architectural specifiers have at least 6 months’ work in the pipeline, and 21% have at least a year of forward work. Similarly, half of all builders have at least 6 months of forward work, with 19% having a year or more ahead of them. As expected, those focussed on commercial construction have a stronger line-up of forward work, as do those with bigger practices/businesses.

Staffing levels continue to be an issue for builders

Most architectural specifiers believe their practice has sufficient staff to manage current and future work, although some concerns remain.

• 70% report having enough staff for current and future work
• 29% say they don’t have enough staff for current work
• 23% say they won’t have enough staff for future work

A quarter of specifiers surveyed say they’ll be looking for new staff in the next 12 months, but of those, 68% say there are not enough good staff available.

The situation is more dire for builders:

• 52% report not having enough staff for current workloads
• 36% say they won’t have enough staff for future workloads.

Over half of those surveyed say they’re looking to employ staff in the next 12 months, yet of those, eight in ten say there are not enough good staff available.

Once again, as in 2015, construction businesses are finding themselves in the position of strong workloads with good forward work, but with not enough qualified staff to get through this work. The staffing pinch continues.

Conclusions

Overall, the confidence survey gives us a broad snapshot of the construction industry heading into 2020. While confidence is down since 2015, the industry remains relatively healthy with the majority of builders and specifiers working to capacity — and with work on the books for the next 6 to 12 months. Considering the healthy state of future work, and the discrepancies when it comes to predictions for businesses vs the industry as a whole, the drop in confidence likely indicates a much-predicted levelling out of industry work, rather than a steep decline.