While yesterday’s PMI results painted a subdued picture, the latest RICS report shines a more positive light on the state of the construction industry
The Q2 2025 RICS Construction Monitor indicates that infrastructure is now at the forefront of sector activity, fostering a measured sense of optimism. With workloads expected to rise, the industry’s outlook for the next 12 months appears increasingly upbeat.
Overall workloads remain flat, but growth is coming
The net balance for total construction workloads indicates a decline to -3% from the previous quarter’s -1%. Infrastructure has achieved +11%, due to a +34% increase in energy projects and a +27% increase in water/sewage projects.
Repair and maintenance, and new work balanced each other out with +5% and 5%, respectively.
Reasons given for the lack of current progress include planning and regulatory delays with 61% of respondents naming it the key issue, and another 39% of respondents pointed to labour shortages.
Some respondents also stated that confusion around changes to the Building Safety Regulator also caused issues.
However, +17% of survey respondents are anticipating workload increases throughout the next 12 months, and private residential and non-residential work are expected to continue to increase on top of the respective +15% and +9%.
RICS chief economist, Simon Rubinsohn, said: “The underlying tone in the construction sector remains subdued according to the latest feedback from RICS members. There is a little more positivity looking forward, but the indicators, at this point, are consistent with a modest rather than material uplift in development.
“Given that planning continues to be viewed as the major factor hindering the industry from upscaling its building programme, it is quite conceivable that the passing of the Planning and Infrastructure Bill will in due course see industry expectations move onto a firmer footing. That said, the need to ensure the building safety regime works more smoothly is also highlighted quite widely in the survey as a factor that would likely impact the pace of development.
“The other big challenge remains around skills. While typically much of the conversation is focused of shortages of trades such as bricklayers and plumbers, the RICS survey highlights recruitment issues amongst professionals involved in the construction industry with building control surveyors and quantity surveyors in short supply.”
July construction PMIs paint a much darker picture
Yesterday, S&P Global’s PMIs were released, showing a fall in housing projects and most staff levels taking a hit. The decline in industry activity was the steepest since May 2020, with the headline figure dropping from 48.8 to 44.3.
Brian Berry, chief executive of the FMB, said: “The sharp downturn in construction activity undermines the Government’s stated ambition to deliver 1.5 million new homes and upgrade a further five million homes.
“Positive government policy reforms to speed up the planning system; introduce greater borrowing flexibility; and upskill the workforce are failing to unlock the much‑needed momentum to drive economic growth. Delivery is key which is why July’s plunge should be setting alarm bells ringing across both industry and government.”
Berry continued: “To get Britain building again consumers need greater confidence in the economy. Small building companies are very reliant on consumer confidence which is why the prospect of further tax increases is such a concern.
“The proposed planning reforms announced in May need to be given absolute priority with a focus on fast‑track approvals for sites of up to nine houses to help small building companies deliver the homes Britain needs.”
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