Labour shortages intensify on back of firm workloads in South West construction market

Material shortages ease but 63% of respondents in the UK cite labour shortages as leading restraint on growth

Although recent official construction data has been a little mixed, the latest RICS Construction Market Survey for Q1 2015 shows labour shortages in the sector intensifying alongside feedback that workloads are continuing to rise. Some 63% across the UK cited labour shortages as an issue followed by 55% highlighting finance.

In the South West, 60% more respondents cited a lack of Quantity Surveyors, 60% a lack of other construction professionals, and 45% more respondents noted a lack of blue collar workers.

While workloads remain positive in the South West across all sectors, the private sector remains the principal driver of growth, with 68% more respondents reporting a rise in private housing workload activity and 41% more respondents seeing a rise in private commercial sector in Q1.

Across the infrastructure sector, respondents in the UK reported the fastest growth since RICS began recording UK construction market data (Q4 1998). In particular, the rail and road sub-sectors are where workload momentum is forecast to be highest. 30% more chartered surveyors are reporting a rise in infrastructure workloads in the South West.

Across all sectors input costs are slightly outpacing prices in the South West, with 50% reporting increases in cost prices and 47% of respondents’ reporting higher output prices.

Despite all the anecdotal evidence that a degree of uncertainty is entering the market in the count down to the general election, outward confidence for growth in the regions market is strong, with 83% more respondents expecting their workloads to rise over the next 12 months and this to translate into 3.75% growth in 2015.

RICS Director of the Built Environment, Alan Muse, said: “Despite the outward optimism, there are some very real unknowns which are impacting on industry, including the general election, the UK’s relationship with Europe and skills shortages.

The upturn in workloads has led to more competitive tendering, particularly across public sector projects, but a lack of accessible finance is now affecting a net balance of 55% of our members, and this will be felt most keenly among the small-medium sized SMEs.

Now that material shortages are becoming less of an issue, the practical challenges are in providing the skilled labour the industry needs and in alleviating the financial constraints, which saw nine months of decreased lending in 2014.”