Optimism ticks up but practices still expect workloads to shrink

Optimism in the architecture sector has ticked up slightly but practices still expect their workloads to shrink in the coming months, according to RIBA.

The index for the institute’s latest Future Trends report rose by four points in December but is still in negative territory at -5. Any figure below zero indicates practices on balance expect their workloads to fall over the next three months.

Most surveyed regions have seen a modest improvement in sentiment, but only firms in the North of England expect workloads to grow, returning a regional index of +31, up from zero in November.

The outlook across all four monitored work sectors also remains pessimistic despite improvements in three sectors, including private housing, which rallied to -5 from -11 the previous month.

However, there was better news for future hiring expectations, with the staffing index bouncing into positive territory at +2 from -3 in November.

RIBA head of economic research and analysis Adrian Malleson said the impact of the government’s autumn budget, which raised employer National Insurance contributions (NICs), is continuing to dampen the mood in the profession.

“Commentary received from practices in December describes a market that has slowed following the recent budget,” Malleson said.

“Some practices describe new enquiries and the market slowing, post-budget, and some are pausing recruitment because of the planned increase in employer NICs. 

He said practices had also described the year ending with familiar and ongoing challenges, including raised interest rates, project cost pressure, poor client confidence, planning delays, increased regulatory burden, and intense fee competition. 

“Nevertheless, some practices describe thriving businesses, with increased enquiries, full workload, new staff being recruited, and sustainable fee income.”