RICS’ UK Construction Monitor Q1 2023 reports that workloads in the UK construction industry had risen in the first three months of the year, but finance, material, and labour shortages remain a serious issue
In Q1, workload activity in the UK construction industry improved slightly, with a net balance of +3% compared to -1% in Q4 2022. Private commercial and private industrial workloads also increased slightly. These went from +2% and +3% net balances, respectively. Public housing workloads increased by a net balance of +7%. Conversely, Private housing remained negative, with a net balance of -9%.
The UK infrastructure has the highest positive workload reading at 23%. The energy component of this sector is the strongest, with a positive net balance of 46% in Q1. This is an increase in the previous quarter’s reading of 45%.
Industry stakeholders continue to be concerned over labour shortages
Anecdotal remarks in the report continue to highlight concerns about labour shortages. The recruitment of quantity surveyors remains a particular concern. Hiring trades also continues to prove difficult.
“The negative mood around development has eased somewhat in recent months with the workload trend stabilising away from infrastructure where the trend remains more positive. A key challenge for the sector continues to revolve around labour shortages in general and skills in particular,” said Simon Rubinsohn, chief economist at RICS.
“Unless addressed, this could prove to be a significant drag on the ambitions of the construction industry,” he added.
According to the report, feedback around expectations on employment remains solid. A total of 35% of respondents said they hired new employees in the last three months. Of these, 27% expected to hire more in the future.
More stakeholders in the industry say they are planning to invest in employee training and development. This is despite the fact that many construction businesses are struggling to make a profit due to the labour shortage.
The construction industry is facing significant financial challenges
In total, 64% of respondents said that financial issues were making their work more challenging. Financial problems have been a problem for the last five quarters. There are concerns these issues will continue due to rising interest and inflation.
Material shortages are also a concern for the industry; however, the number of people (56% of respondents) who said it was a major concern has decreased for the fourth quarter in a row.
“Whilst the construction sector continues to recover from the recent market and economic pressures, the skills shortages within the sector are a continued cause for concern as construction demand outstrips the industry’s capacity,” said Mahvesh Ibrar, senior public affairs officer at RICS.
“Not only is this impacting our housebuilding ability, but if we are to tackle the climate emergency and meet the retrofit challenge, this issue needs to be addressed as a matter of urgency,” concluded Ibrar.
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