Material and labour shortages continue to impede UK construction activity

Material and labour shortages remain some of the biggest impediments to UK construction activity, revealed the latest RICS UK Construction and Infrastructure Monitor for Q1 2022.

Of the 712 chartered surveyors which took part in the quarterly survey, 84% reported that availability of materials is a major constraint to current activity.

In addition, almost three-quarters highlighted labour shortages as a significant issue affecting construction activity.

Despite the challenges, 34% of respondents reported a rise in workloads in Q1, slightly up compared to the previous quarter’s figures (33%).

Workloads are mainly being driven by a continued focus on infrastructure projects, as 41% more participants saw an increase in this area.

They also cited a firm commitment to energy infrastructure, as over half (53%) reported a rise in workloads in this subsector — the highest since records began.

Regionally, the North East, Yorkshire, North West have posted the strongest growth in workloads this quarter (cited by 41% of survey participants).

However, Midlands and the east of England are anticipating the greatest pick-up in activity in the year ahead, as 47% of surveyors predict growth in these areas.

Looking ahead, respondents still remain optimistic for the coming year, but have moderated their expectations for profit margins — the net balance this quarter slid to +1%, down from +10% in Q4 2021.

In addition, 42% more expect credit conditions to worsen over the coming twelve months, the weakest net balance since records began.

Simon Rubinsohn, chief economist at RICS, said: “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 that 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.”

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