Healthy future for UK construction market

Growth in the construction industry has been boosted by a strong housing market and buoyant commercial property market, according to the latest RICS construction market survey.

Growth in construction workloads accelerated in the first quarter, expanding at the fastest pace since Q2 2004. Workload growth is high, with 28 percent more Chartered Surveyors reporting a rise than a fall, up from 26 percent in the last quarter. The strongest activity was within commercial and private housing - both growing above their long-run survey averages for six consecutive quarters. Wales saw the fastest expansion in workloads and, after two quarters of decline, Northern Ireland workloads picked up firmly.

Surveyors’ confidence in the future outlook for activity remained robust. Industry confidence is being driven by the strength of the wider economy and the booming housing market. Nevertheless, confidence in profit outlook, over the next twelve months, remained below the survey’s long run average for the fourth consecutive quarter. Energy and raw material cost pressures eased slightly in Q1 perhaps signalling a pick up in profitablilty to come.

Skill shortages remained unchanged, with 32 percent of respondents having recruitment difficulties. The labour market appears to be stabilising as a healthy industry continues to demand more labour, while the movement of workers from eastern Europe may be starting to slow.

RICS senior economist David Stubbs said: “The immediate outlook for the construction industry is sound, as a healthy economic outlook continues to boost workloads. The unsteadiness in equity markets recently has not shaken firms’ confidence and has had little impact on commercial growth. Construction projects in the private commercial sector are leading the way with schools, hospitals, and offices a hotbed area of activity.”