Construction up across the UK, led by homes and office developments

Construction workloads rose across all sectors and in each part of the UK in the second quarter of 2015 according to the latest market survey from the Royal Institution of Chartered Surveyors (RICS).

Some 44% more surveyors reported higher activity levels, up from 37% on the previous quarter, driven by office development and private house building.

The pace of growth in Northern Ireland was slowest and at a headline level, 74% more respondents expect to see their workloads rise and respondents forecast growth of 3.8%.

Over half, 51% net balance, of respondents reported higher workloads in private housing and 58% in the private commercial sector, following a 22% rise in new orders in the first quarter of the year.

Activity in London and the South East appears stronger than elsewhere in the UK, so profit margins and employment expectations are higher in these parts of the UK than anywhere else with 62% more respondents expecting to take on more people over the next 12 months and 58% expecting higher profits.

Financial constraints and issues with planning and regulation remain the key restraints on growth in the sector with 58% more surveyors reporting difficulties in the second quarter. In addition, 40% of respondents reported shortages of materials, but this is an improvement on the 60% who were having such difficulties through most of 2014.

‘The upturn in workloads has led to a less competitive tendering environment, particularly across public sector projects, but a lack of accessible finance is now affecting a net balance of 58% of our members and while concern over labour shortages dipped slightly, the demand for cost and project management skills rose,’ said RICS director of the built environment, Alan Muse.

‘Also typical as workloads recover is the emergence of other impediments to growth, outside of labour and finance constraints, such as planning and regulatory barriers, which could be exacerbated if cuts are made to local authority planning departments as backlogs in planning applications will have a knock-on effect to work pipelines,’ he added.

Meanwhile, the latest state of the trade survey from the Federation of Master Builders (FMB) says that in the second quarter of the year it is skills shortages that are undermining activity in the small to medium construction sector despite the fact that the building industry has been booming for more than two years.

‘There can be no doubt that the building industry is booming but the skills shortage continues to loom large over our industry. Almost half of construction SMEs are struggling to recruit adequate numbers of bricklayers, with others finding it increasingly hard to hire carpenters and joiners, site managers and supervisors,’ said Brian Berry, chief executive of the FMB.

‘Looking ahead, our members are reporting that their workloads are likely to rise over the coming three months which means the shortage of skilled workers will only become more acute. It also begs the question, how much stronger would the pace of growth in the UK construction industry be if we had an ample supply of skilled tradespeople,’ he added.

He explained that while the Government is determined to increase the number of apprentices being trained by the industry over the coming five years, the recent announcement on the new levy has led to more questions than answers.

‘We are still unclear regarding the details surrounding this new alternative cross industry levy. If the levy on large employers is only used to fund apprenticeship training by large employers, how will apprenticeship training by small firms be dealt with?’ said Berry.

‘Given that two thirds of all construction apprentices are trained by micro firms, it’s vital that we have a system in place that drives high levels of apprenticeship training through companies of every size. We are keen to work closely with the Government over the coming weeks, the stakes couldn’t be higher so we must get this right,’ he added.