Construction activity lifts despite material and labour shortages: Rics

Construction activity lifts despite material and labour shortages: Rics

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UK construction activity set a strong pace in the first three months of the year despite concerns over material and labour shortages, says the Royal Institution of Chartered Surveyors.

The body says that +34% of respondents reported a rise in workloads in the first quarter, up from +33% in the final quarter of last year, according to its latest RICS Global Construction Monitor.

But the report adds that “despite the strength in current workloads the impact of global supply chain shortages is seriously impeding activity across the UK”.

It found that +84% of respondents reported that the availability of materials is a major constraint to current activity, albeit 7% lower than the global average.

It adds: “Labour shortages and access to the right skills doesn’t seem to be improving as the shortages continue to constrain the sector, almost three-quarters of respondents continue to highlight this issue.”

As a result firms in the sector have moderated their expectations for profit margins. The net balance of respondents who expected to make a profit this year slid to +1% down from +10% in final three months of last year.

The report added that 42% more of respondents expect credit conditions to worsen over the coming twelve months, the weakest net balance since the survey began.

The study found that workloads are mainly being driven by a continued focus on infrastructure projects, as 41% more respondents reported a rise. Respondents also cited a firm commitment to energy infrastructure as over half, or 53%, reported a rise in workloads in this area, the highest since the report began.

Looking across the UK, the North East, Yorkshire, North West have posted the strongest growth in workloads with +41% of respondents citing a rise. However, when looking to the year ahead, it is the Midlands and East of England that anticipate the greatest pick-up in activity, with almost half of respondents, or 47%, anticipating growth.

RICS chief economist Simon Rubinsohn says: “The good news in the latest report is that the industry remains positive about the outlook for activity and that the generally upbeat mood can be seen not just in regard of infrastructure and housing development but also in the commercial sector.

“However, it is clear that the sector faces significant challenges which have been reflected in recent official data showing a sharp rise in vacancies across the construction industry. RICS numbers demonstrate these shortages are pretty much across the board including quantity surveyors and project managers as well as both skilled trades and more general labour.

“This, combined with problems around accessing building materials in the current environment, is exerting significant upward pressure on construction costs at the present time.”