Infrastructure is still the strongest performing sector, while private commercial and industrial perform the worst
The RICS construction monitor for Q1 2025 shows that construction workloads are mostly stable.
There is also cause for mild optimism for growth in the rest of the year.
Financial issues remain a huge hurdle for firms
The headline balance for workloads stood at -1%, a neutral figure that remains steady from the previous quarter.
Infrastructure remains the top performing sector with a net balance of +13%, and energy being the best performing sub-sector at +35% due to projects such as Hinckley Point C and offshore wind farms.
Still, financial challenges are still causing slow progress for many projects, with credit conditions hitting a net balance of -21%, and 63% of respondents stating it is causing them difficulties, followed by regulatory issues, and planning issues.
Respondents also cited issues with red tape and clarity in spite of local planning reforms, and a further “brain drain” of skills going to the Middle East and North America, and the skills shortage itself impacting projects.
Expectations for the next 12 months are cautiously positive, sitting at +17%, with infrastructure projected to continue leading sector growth, and improvement for private residential and non-residential sectors.
The RICS construction monitor shows activity “largely flat”
A section of the report states: “A striking feature of the Q1 results is the share of respondents both in Canada and the USA who are now drawing attention to the increasing cost of materials on the back of the higher level of tariffs as a factor impacting activity. In the case of the former, this jumped from 60% to 69% (just 50% in Q3 of last year) while in the USA, it leapt from 44% to 66%.”
RICS chief economist, Simon Rubinsohn, said: “Construction activity was largely flat over the quarter with respondents expressing a little more caution in the face of the heightened level uncertainty both at a global and domestic level. In particular, concerns about the implementation of tariffs and what this might mean for costs and economic activity as well as the potential impact of the uplift in employer NI contributions are highlighted in the feedback.
“Significantly, aside from financial issues the most cited obstacle to activity referenced in the survey is planning and regulation which chimes neatly with the government’s agenda. Addressing this issue is critical if the ambitions around housing and infrastructure are to be met.
“That said, for now the forward-looking metrics point to a relatively modest uplift in construction workloads over the next twelve months with profitability in the sector remaining under pressure.“
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